Google is mixing up some music and serving it from the cloud and massifying it through social networking features to create its long anticipated music service. The Music service would thus include an a la carte digital download store, a subscription cloud locker ($25 to the consumer per year) through which listeners would stream or download their music. Google is also working on providing each customer the ability to listen to a full track song for the first time after which subsequent samplings of the same song will be 30 second bits. This is reminiscent of the Lalal.com music service. The cloud locker would also enable social networking features, such as allowing users to send playlists to friends in their networks and also enabling the friends to sample the songs once in its entirety. Google would make available a web-based music player and a mobile application for playback of tracks from the cloud-based locker.
Google is seeking an initial three-year licensing agreement from the labels for each territory it launches its music service. The details of the launches have come to the fore yet.There are questions that remain unresolved, such as how much storage capacity the locker would provide and whether the labels would grant Google the ability to provide a free full-track stream for the duration of the initial three-year agreement and exactly how labels and publishers would be compensated for their music.
Google’s cloud-based locker would scan a subscriber’s hard drive for music files. Any tracks that Google recognizes as music that it has licensed would be listed by Google as being accessible to the user from their cloud-based account. Such tracks could include those purchased at the Google download store or another download retailer, tracks ripped from a CD and even music files downloaded from peer-to-peer networks.
Inclusion of P2P tracks may get some pushback from label executives. However, in order for this concept to work, Google will need to allow P2P tracks to populate lockers. On the contrary, the labels would probably press Google to take stronger measures to fight music piracy, such as excluding P2P sites from search results or blocking the use of apps for Google’s Android mobile operating system that facilitate P2P access.
It is expected that Google music would sell at the conventional wholesale rate of $7 for a digital album and 70 cents for most tracks, 91 cents for superstar tracks and 49 cents for catalog tracks. A 70 cent wholesale download usually retails for 99 cents, while a $7 wholesale digital album typically carries a retail price of $10
Google Music was announced in May 2010 and it is expected to be up and running by the end of this year. As always, Google finds it looking into the eye of Apple Inc. with its iPods and iTunes dominating digital music space in US, accounting for 28% of all music purchased by US consumers in Q1,2010. Currently, Apple holds more consumer credit cards than any other company besides Amazon. Google Checkout in comparison is not put to pace.
In order to stand up to the Apple iTunes, iPhone and iPod, Google will need to look at the drawbacks of Apple as a music platform and must position itself as an alternative to the Apple Music platform. A few pointers to Google to get a march ahead of Apple in the digital music space:
1.Leverage Cloud Computing
Making an iTunes clone is one thing, making an iTunes alternative is completely another. Google with its expertise in cloud computing has the best opportunity to be the iTunes alternative. This is especially true in face of the trend where Smartphones are becoming primary storage devices. Even then, music storage on phones is not a realistic and sustainable alternative. Google must focus on cloud storage, which users will sync/access to music files.
2. Streaming Media
Streaming media synched to the cloud is the future of music.Music companies like Rdio, Spotify and Rhapsody already offer subscription based services for music on Mobile. Google’s opportunity would be to create a hybrid service that offers synching, streaming and purchase of music. That is where Google Checkout checks in.
3.Cross Platform Integration
While Apple specializes in selling all inclusive content packages, Google’s USP of being “Open” can help them make a music platform which is cross platforms. The acquisition of Simplify Media by Google in May is a good measure in this direction. Google already has plans to make their Google music available across a range of devices through the Android platform. The next frontier is to make Google Music available on all platforms whether Google or not.
4.Leverage vendors and music companies currently not on iTunes platform
Getting a sign-on on the Google platform with music labels and companies will allow Google to access popular content that is still not available in the iTunes store (eg. Beatles). Many such blank spaces exist where iTunes has not been able to establish themselves. Music will be a key factor in smartphone sales success, but with 75 to 85% of the catalogues still untouched by iTunes, there’s plenty of room for Google to step in.
Thus the positioning of Google Music is thus not just an iTunes+, that is open across platform hosts more labels and has new cloud based services and streaming that leverages Google’s “Open Technology”