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Google Buys Songza and That's a Loss for Amazon

By: Rocco Pendola | 07/01/14 - 04:23 PM EDT

Google (GOOG) made it official by closing a deal to take out Songza, the streaming music service that plays songs that go along with whatever the listener happens to be doing in the moment, be it from an activity, mood standpoint or both. 

Good deal for Google, which says nothing will change immediately for Songza users. Google plans to keep Songza as is for the time being as it considers how to bring Songza into the larger Google Play fold. 

Last year, I met with Songza co-founder Elias Roman. Roman told me that, put simply, he wanted Songza to evolve into the e-commerce music platform. His words, not mine, but I consider that a fair characterization of his vision. Roman colored these plans in a recent interview with RAINNEWS.com:

We're really pleased with how that's coming . . . Earlier this year we announced a partnership with Unilever, the second-largest advertiser in the world. They identify a small number of platforms they want to get behind. Being selected as a partner has been awesome, and a validation of the platform we've built . . . The fundamental difference is that we don't think we're a music service. We don't try to monetize like a music service, with volume ads . . .
Let's imagine Nike  (NKE), and an ad buy on Pandora  (P) compared to Songza. With Pandora, the conversation might go something like this: 'We want to move the Nike+ Running App. Let's target people in a demographic, and let's run an audio ad for the product.' In the best case scenario, you identify who the runners are on Pandora and serve them an audio ad while they're running. So Nike has paid money to piss people off at the moment you want to say you can be better for them. It's the antithesis of how Nike wants to spend its ad dollars.
Songza can take the running situation, and turn it into Running With Nike. Right before the playlist starts we can stream a 15-second pre-roll, maybe saying how you can track and improve your running with the Nike+ Running App. The ad that you show might target that you're on a run at a certain time of day, but there's no interruption to the run. It is a better run for Nike having brought it to your screen, not a worse run ...
If ads are ads, people ignore them. But if ads are consumable content, people want to consume them.

That's awesome. And I figured right up Amazon.com's (AMZN) alley. Amazon has been an investor in Songza. Here's what I wrote about a potential marriage between the two companies in March. 

So I'm a bit puzzled that Amazon did not move more aggressively here, assuming it moved at all. 

That said, this hardly hurts Amazon, who doesn't need Songza to keep its online retail business humming along. In the bigger picture, it's just another threat to Pandora, as the company remains stubbornly committed to doing pure play radio without even the slightest sights set on diversifying its consumer product or looking for revenue beyond relatively straightforward targeted advertising. 

Rocco Pendola writes for TheStreet. He lives in Santa Monica. Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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