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Why Google Just Snapped Up Music Startup Songza

After weeks of speculation, the search giant confirmed the deal. Here's why the tiny music streaming company caught Google's attention.

You may never know how much Google paid for Songza, the playlist-focused music streaming service the search giant announced it planned to acquire on Tuesday. In early June the New York Post speculated that the offer was close to $15 million, while others said the number was even higher. 

Terms of the deal weren't mentioned in Google's announcement, but it nonetheless proves that music curation may be the most competitive front for startups in this crowded space. Songza, a fledgling startup founded in 2006, features DJ-curated playlists based on various moods and themes and employs about 50 people. It's said to draw 5.5 million active users--a drop in the bucket compared with Spotify's 24 million active users, and Pandora, which has 77 million active users.  

Still, human curation is what drew Apple to Beats' streaming service and was the reason Beats was able to raise $60 million in funding in the first place. Real people recommending songs will help set Beats apart, Quentin Fleming, an adjunct professor at the University of Southern California's Marshall School of Business predicted back in December, and sure enough, Apple ended up acquiring the service, presumably to soup up iTunes Radio and its other music services. 

"Google has never used humans to do curation, but Songza is all human curated," David Pakman, a venture capitalist, said via email. "Perhaps this is Google buying some human musical curation to put atop their Google Play and YouTube music subscription services." 

Beyond that, Google may also want to compete with Spotify, which continues to dominate the music streaming space and is rumored to go public as early as this fall. As the Hollywood Reporter notes, "Google's market share in the space remains small with its library of 25 million songs" in 28 countries. 

While there are no plans to shut down Songza, the company will relocate from Long Island City to Google's offices in New York. 

Last updated: Jul 1, 2014

JILL KRASNY | Staff Writer

Jill Krasny is a staff writer for Inc. magazine, where she covers the intersection of entertainment and startups. Prior to Inc., she was a writer for MTV and Esquire and an editor at TheStreet. She is a graduate of the University of Southern California with a degree in communication. She lives in New York City.

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