In just over a year, online music streaming service Songza has attracted 2.4 million active users in Canada with its "music concierge" – a virtual DJ that offers a selection of playlists appropriate for a user's mood or current activity. On Thursday, it will open its first international office here, in a bid to cater to more advertisers as well.
The website is part of a growing number of streaming music services, such as Rdio, Pandora, Rhapsody and Spotify, which work like a Netflix for music. Rather than paying to download and own songs, as with iTunes, customers simply browse a digital library, typically for a flat fee. Largely because of rights negotiations, some of those services are officially unavailable in Canada for now. But their growth in the United States has helped to market the idea of streaming music in Canada.
Most services are subscription-based, but Songza instead chose an ad-supported model. Three years into the business, it is not yet profitable. Opening its Canadian office is part of the effort to change that.
"It's going to be very much about working with the brands, and what makes sense with the brands to provide music to make everyone's experience better," said Vanessa Thomas, the newly hired managing director for Songza in Canada.
Ms. Thomas has been meeting with advertising agencies and big-name marketers in Canada, such as Pepsi, to sell them on Songza's model.
Songza is focused on "native advertising" – that is, giving brands the chance to sponsor content rather than interrupt it with ads. In Songza's case, this usually takes the form of a "brought to you by" type of label on selected playlists.
For example, it recently conducted a campaign in Canada to help Febreze promote a new line of "sleep serenity" scented sprays designed to be relaxing. Febreze purchased naming rights for playlists of relaxing music created by the Songza team. The playlists, such as Acoustic Singer-Songwriters, Mountain Stream and Relaxing Rain, were among the handful that the "music concierge" places most prominently on the website and app.
In addition to offering playlists tailored to a campaign's theme, Songza can also use its data to tell advertisers what playlists attract certain demographics.
Other brands that have done Songza campaigns in Canada include Mr. Clean, Chevrolet, Nissan and Telus.
Native advertising allows brands an alternative to banner ads or "preroll" videos that must play out before users can access the content.
A limited number of Songza campaigns have involved preroll as well, and it also offers banner ads, but non-interruptive ads are where the company sees the biggest appeal.
Native ads are a particularly good fit on mobile devices. Three quarters of Songza's Canadian usage comes from those devices, such as smartphones and tablets. Mobile is a challenge for advertisers, since banner ads don't fit well on smaller screens and the tolerance for interruption is low.
Songza is also testing a mini-subscription model, where users can pay 99 cents a week to see no ads at all.
"The big picture is native branding," said Ms. Thomas, who has had a front row seat for the changes that have hit the music industry, with a background in radio and nearly 12 years overseeing sales at Nielsen Music, North America.
"I've just spent an entire day with one of the ad agencies with several of the big advertisers in Canada, and they're very interested in that non-intrusive advertising. … We have to evolve as the needs of the advertisers change."
Number of monthly active users that Songza has in Canada.
Approximate number of songs played every month on Songza in Canada.
Number of days it took for the Songza app to reach one million downloads in Canada after launch in summer of 2012.
75 per cent
Portion of Songza users who access the service via mobile devices(smartphones and tablets).