Every lovestruck teenager in the 1990s made mixtapes they thought were priceless. Google’s (GOOG)acquisition of Songza, an online music service, shows that having a talent for mixtapes can net you at least $39 million.
The initial genius of online radio was to have computers choose what songs played next, giving rise to a seemingly infinite universe of customized radio stations. Pandora (P) rode that wave to a dominant position in the industry—and an initial public offering. More than 75 million people use the service.
Algorithmic disc jockeys (or video curators and news-feed editors) have become standard in most digital media businesses. Choosing what comes seems particularly crucial to music services because change comes every three minutes or so. The limitations of leaving this function to a computer are obvious to any regular Pandora user who sits through serviceable, yet woefully predictable, playlists.
Songza has a more refined ear. At its office in Queens, one finds a roomful of humans that sit around making playlists all day. Some of them, like the Blogged 50 playlist, are constantly updated, while others are considered finished the moment they’re posted. The company’s formula isn’t immune to algorithms—it uses them in hopes of serving the best playlist at a particular time.
This is most visible in its concierge service, which tries to determine what you might be doing and suggest playlists that correspond. (Right now, it thinks I might be interested in “Working to a Beat” or “Enjoying the Morning.”) As one of Songza’s 5.5 million users, I find the computerized concierge to the be the weakest part of the service. It seemed clever for about two days; now I search the playlists myself.
Beats Music (AAPL) has a similar formula, although it relies on playlists curated by people you may have heard of, rather than anonymous hipsters in Long Island City, N.Y. When Apple bought the company for over $3 billion earlier this year, its musical savvy seemed part of the allure. But Beats also has a lucrative headphone business and celebrity executives. All Songza offers Google is its ability to group songs together in a way people want to hear.
There is a broader movement in the digital-music industry to take control back from the machines. At a time when the number of these services is expanding, it seems rational that taste will be a distinguishing factor. That’s how the music industry always worked.