2019 American Music Awards

The Deal: Songza Gets To The Second Round

WHAT: Internet radio service Songza has raised $3.8 million in funding, according to a Securities and Exchange Commission filing dated April 12. The New York-based service was acquired by music download store Amie Street in 2008 and launched in its present form--same name, different product--in 2011. The company is off to a good start. Originally available in the United States, Songza is now accessible in Canada and ranks as iTunes' No. 2 music app in the country, according to App Annie. In the United States, where 45% of people listen to Internet radio each month, 4% of smartphone owners have downloaded the Songza app.

WHY: Songza is small compared with market leader Pandora and Clear Channel's iHeartRadio, but the company has a unique take on Internet radio that is winning over listeners. The foundation of the service is a feature called Concierge that guides listeners to a playlist that's appropriate for specific moods and activities. For example, in the early afternoon Songza might offer handpicked playlists for "Getting Fired Up," "Working to a Background Beat" and "Exploring Obscure Sounds." A morning Concierge might offer music for "Singing in the Shower" and "Waking Up Happy." Concierge is such a unique feature that Clear Channel's iHeartRadio launched a similar feature called "Perfect For" in January.

WHO: The company hasn't revealed the latest investors or its planned use for the funding. However, a round of funding that was raised in 2012 helped fuel its growth. Investors included backing by Amazon (which acquired the Songza co-founders' earlier startup, Amie Street), Deep Fork Capital, Metamorphic Ventures and artist managers Troy Carter and Scooter Braun, among others. The company's board of advisers includes Mark Eisenberg, former executive VP of global digital business and head of business and legal affairs at Sony Music Entertainment, and artist manager Julius Erving Jr.

IF: The fact that the Web radio market is growing could give Songza's investors an exit opportunity in the coming years. The service doesn't even appear in Triton Digital's list of the top 20 streaming stations in the United States. Pandora has a sizable lead over Clear Channel, Slacker, ESPN Radio, Cumulus and National Public Radio in the United States, but there are plenty of both listeners and listening time available for new and young companies. The radio market is immense--about 93% of people listen to radio each week, according to Arbitron--and listening is moving from broadcast to the Internet. Apple's upcoming entry into Web radio could lead to other big companies--think of behemoths like Google or Amazon--launching their own radio services. When a company decides to buy a service rather than build one from scratch, Songza will be available.


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