The Roller Coaster of Music
Remember the time where we had to plan our weekend activities for the Tape/CD release of our favorite artist? Then Napster burst onto the scene and we become introduced to MP3 files, and our CDs were dropped into a storage bin, never to be found again. The feverous growth of MP3s (and subsequent death of Walkmans) were further driven by the inception of the iPod and other MP3 players. But just like their earlier counterparts, affordable (and sometimes free) connectivity has paved the way for MP3s giving way to streaming services. What started with Pandora, Slacker, and a battery of other services has now become a market with 28 million users. One thing is for sure, we love our music and while the size of the market continues to grow, change is inevitable.
While streaming services come in all shapes and sizes, a few rise to the top of the pack when it comes to tenure and user base. While users continue to flock in droves to each one of these streaming services, tech giants realize the importance of these audiences and two of them have made recent moves to make a strong play into these spaces, all while possessing native streaming services. What was a market dominated by one or two players, has quickly become a fragmented space with no real dominant player. I can list off 10 of these right off of the top of my head.
Apple Buys Beats
While not one of the largest streaming services in the space, Beats showcased volatile growth and a hardware component so trendy, that it is difficult to walk into any gym in America without seeing a kaleidoscope of Beats headphones. Beats unique selling point is that they are able to curate the music to your needs, based on your behavior. While this is a feature that many other streaming services tout, Beats appears to have honed in on what users actually want from a curated service. Less repetition, more adjacent artists, and an ever learning and growing platform. Apple had iTunes Radio, which has seen adoption from the quintessential Apple Fan-dom, it never really saw the scale associated with the larger streaming outfits.
Google Buys Songza
One of the most popular streaming services, as it pertains to user experience is Songza. This streaming services doesn’t curate music based on your behavior, however, it will allow you to select music based on your ‘mood’ or activity. Just waking up from an afternoon siesta? Songza has a selection for you, looking to start a party, there is a group of stations to help, enjoying a romantic evening with no kids, there are stations for that. All of these stations are custom tailored to match certain moods and the musical selection reflects this mood. Google had their own Google Music service which wasn’t very popular. Admittedly, I am a huge Google Fan-boy and even I didn’t use this. It was just not a good platform and I was confused on whether it was my phone’s native music storage or a streaming service. It never made sense, so it remained unused on my devices. So what is the draw to these services? This particular deals were not cheap, Apple spent $3 billion for Beats and Google spent $39 million for Songza (which feels like a bargain) and put two of the largest tech giants directly in the cross hairs of some major streaming music players (I am looking at you Amazon and Pandora). So the question lies in what drew them to make such a purchase? I hypothesize 4 potential reasons for which I will outline below: Audience, Technology, Talent, Advertising.
- Audience: While there is no doubt that the audience associated with these purchases were vast, I am talking more about audience information (data) and not necessarily the scale. Any avid streaming service user who enjoys a curated station, spends a great deal of time weeding out the songs they do not like, and promoting the songs they do like. This data is golden for a digital marketer and manufacturer of technology devices. Why wouldn’t Apple want to know what music is hot right now so they can promote it on iTunes or use these songs in their advertisements? This data about real time trending, popularity and user feedback is wonderful.
- Technology: With Beats, it was more than a streaming service purchase, Apple inherited one of the most popular music hardware devices commonly paired with their vaulted iPhone family. While many know the Beats hardware is not the highest quality on the market, they are trendy, cool, and Apple has always been known as the ‘cool’ brand; a monacre that has taken a beating as Samsung has wooed the ever coveted tween market. Couple this hardware purchase with the fact Apple is eliminating the 3.5” audio jack from their new phones, and you have a beautiful segway into increased adoption and purchase of new hardware when the new iPhones release….preferably Beats headphones that are surly to come equipped with the Thunderport already native.
- Talent: Beats has Dr. Dre, Songza has a battery of very smart engineers and marketers. Was this a talent buy? Many feel that Google purchases many of their acquisitions based on talent alone. However, neither of these services are truly ‘unique,’ which makes the talent rationale harder to validate.
- Advertising: While Pandora has their own native advertising network (one that we know very well FYI) equipped with ads of varying levels, Beats and Songza have their own display component. Songza does not interrupt your listening experience with audio ads, as they leave the advertisement to display only, primarily when you are making changes to your musical selection. This is yet another property Google can employ their Display Network to but to spend this scale of money on more display real estate, that doesn’t feel as if they would have received solid value.
Whatever, the reason behind Apple and Google entering the streaming music service space, one thing is for sure and that is they are going to look to implement these new properties into the sphere of overall portfolio to try to keep the threat from Amazon at bay and chip away at Pandora’s share.
Unless there is separate play all together… One that fully integrates these services into the ecosystem of an already Apple/Google dominated landscape. Imagine a fully integrated experience for which you can be listening to your streaming service in the car (via Wifi, 4G, etc.), get to your house and walk into your house to have the song continuing right where you left it (due to the connectivity to adjacent products/offerings), and follow you throughout your house. Now that would be a seamless and beneficial service. The technology is there, we just need a platform to operate and bring this entire experience together. O the possibilities….