Canadian Startup Groove Surpasses One Million Users, Switches to Freemium

Montreal-based music startup Groove is switching to a freemium model after surpassing one million users.

For cofounders Tri Nguyen, Bruno Sylvain and Eduard Lucic, the past few months have been busy. After surpassing the one million mark they were admitted into a well-known accelerator program in their city. Now they’ll spend the next three months putting the finishing touches on their product for venture capital.

Available sometime next week, the freemium model will be available to users in Canada, Germany, France and Japan. Currently the app costs $3.99, while the new model would only charge users for universal capability including iPads.

The startup wants music lovers to know that if they don’t want to spend time building playlists and selecting songs, they don’t have to. Compatible with iOS and Windows 8, Groove studies its user’s listening habits and creates a wide variety of instant mixes, like a personal DJ.

The app learns and adapts based on user responses to song offerings. Sylvain said it allows them to re-discover music they enjoy. “The goal is to try to anticipate what you might want to listen to based on your listening habits,” said Sylvain.

Venture capital’s relationship with startups in the music space has been unpredictable. Just five to seven years ago investors might have fled business pitches, with memories of Napster’s epic decline and subsequent legal battles fresh in their head. Things are much different in 2013 of course, after a proliferation of high-quality apps have been created, like RDIO, Spotify, and Songza to name a few.

Along with the rise of Songza the passive consumption space has emerged, even with “Songza for video” startups gaining headway like 5by. Unfortunately curated playlists are bound to displease some. Nguyen put it in simple terms:

“Brittany Spears may fit in to a certain mood but it may not be what you want, and for a lot of people it annoys them because they want that element of control,” said the CEO. “The difference with us is a lot of those users care what they’re listening to, so some of those songs on Songza don’t correspond to their tastes.”

The next steps for the team (while juggling the demands of an intensive accelerator program) will be to create sophisticated social aspects. Currently they’re building out capabilities that will integrate with popular platforms like RDIO and Spotify. Moreover, Groove wants to offer custom song choices based on comparisons of song libraries between friends.

Despite the impressive traction the cofounders are quick to point out that they aren’t exactly stashing wads of cash in their baseboards. Most of their users came along during free promotions. They’re still hungry for more users and they want to continue to build a better product.

One such unlikely but encouraging reason came from an email from a user. The person was suffering from the effects of a tumor that was slowly debilitating his vision, thus making it harder and harder to manually select songs. Groove made his life easier and he told the cofounders their work was appreciated. Talk about user validation.

The biggest challenge, said Sylvain, was building something for everyone. Some users like the same songs over and over again while others love discovering those songs that lie in the dusty corners of their libraries. Either way it looks like this startup is doing a fair job pleasing the masses.