Despite the seemingly endless obstacles to overcome in the streaming music field – established players, complex royalty and licensing arrangements, little opportunity to differentiate from competitors, the list goes on… – it hasn’t stopped a large number of apps and sites from trying their hand at attracting listeners, to varying degrees of success.
One of the better success stories, Songza, was acquired by Google yesterday afternoon, which really embodies the challenge facing independent music apps: fly high right off the bat, or hope some huge tech company sees enough value to buy your startup and plug a hole in their own service offering.
Fans vs. Funding
Songza has built up a healthy 5.5 million active user base in four years operating under its current guise.
Despite this, early predictions that it could steal the thunder of Pandora and Sirius XM proved wide of the mark. Pandora has 250 million registered users, which even when pulled down to around 77 million active still dwarfs the Songza . Sirius XM, meanwhile, has established cross-industry partnerships and a broad media strategy that a startup like Songza can only dream of.
The app has continued to develop new features and grow a wider fan base against this backdrop, but the industry elite has been a tough not to crack. A lot of this comes down to funding and the limited resources that even the pluckiest young startup can throw at standing out from established players. It will obviously now have huge resources to call upon, but whether it can do so in the guise that attracted fans in the first place is another question entirely.
The concern for fans of other indie music apps will now be that their favorites will face that same decision: starve for funds or be eaten by those who already have them. After all, we only need so many listening services and the consolidation now occurring is a clear sign that the marketplace is maturing from this early phase of rampant competition.
A Tough Future for Music Apps
As Google, Apple, and Amazon choose their weapons and set up their positions to do battle in every cornr of the streaming music space, indepedent music apps are going to find it hard to survive. Aside from the fact that they won’t have deep enough pockets, for the technology companies this is about more than music, and probably more than entertainment content as well.
The dominant tech names need to keep consumers in their own controlled operating system, as Apple has previously achieved with iOS and iTunes. Its purchase of Beats is a further indicator that when these companies are unable to build their own solution, they’ll simply buy their way around it.
This will largely occur on mobile devices and the new Amazon Fire phone is just the beginning. As wearables and phablets are developed to fill every corner of the mobile marketplace, convincing customers that their entertainment offering trumps the competition.
Music plays a crucial role in attracting consumers to make their purchases within a particular company’s ecosystem, as do movies and TV. All of which could make music (and other entertainment) a form of loss leader for Apple, Google, Amazon and other rivals. And when there’s fierce competition from multiple rivals with resources, the only sure thing is that prices will be driven down and leave not much at all for the little guy music apps simply trying to stay alive.