Why Isn’t Google Licensed For Music

It should be a no-brainer, in many other web spaces its not just a no- brainer but the default setting for your fingers on a computer keyboard. Yet the music industry has so far failed to get in bed with the Internet’s key player to provide a digital music service that eclipses pretty much everything else in the market.

Why?

Good question! Here’s a few potential answers, although doubtless, the real answer is a combination of all of these things & more.

1. ‘Don’t Be Evil’
Does Google simply looks down its 21st century nose at major record labels whose  history of ‘not being evil’ is a long way from being exemplary? Conversely the mainstream music business probably views Google as a collective of billionaire hippy geeks – check Paul McGuinness’ Midem speech. They are not natural bedfellows. But so what, an organisation is made up of individuals. There will be connective thoughts between the two sides (maybe EMI will lead this with their New Media leader who is ex-Google).

2. Terms
Google won’t agree with the labels’ terms in respect of advances, pricing, ownership, access blah blah blah … This point assumes that the parties are sitting around the table in the first place. We know they have and we know they can come together to resolve mutual problems. The proof of this is in China. Google’s share of the search market in China is poor – 26%, compared to the leader of the pack Baidu at over 70%. Simultaneously Baidu was being sued by labels for linking directly to illegal p2p downloads of tracks, thus seriously undermining the music industry’s capabilities of tackling one of the world’s biggest digital music markets away from ‘Pirates’. Now, Google has launched a music search service that links to ‘legal downloads & streams'(http://www.guardian.co.uk/media/2008/aug/06/googlethemedia.chinathemedia or http://www.paidcontent.org/entry/419-googles-music-search-in-china-goes-live-working-with-music-labels) with revenues being generated from Google Ads. This gives Google a serious edge against its competitor (many of its searches would have been music related), it gives the labels a legal stronghold in a huge but difficult market and it gives Chinese consumers free music at point of access that is legal. Everyone’s a winner … Except in the west!

3. Models
The business model above suits all for China. But here in the free west, labels still want to force us down a road of high pricing & track by track sales, scarcity & friction pervade the digital music markets of Europe & America. And this is of the label’s choosing which is why the digital music market remains untapped to the tune of 95%. I suspect that Google’s vision of a future digital music market is similar to what Gerd Leonhard talks about as ” … frictionless, inexpensive and practically invisible …” Hey, they’ve even managed it in China with the labels onside! Free at the point of access via ad-funding, that’s where Google would come from. That’s a huge leap for a business that still makes most of its revenue from selling CDs. If a service of that nature became ubiquitious, labels would have to re-align their entire infrastructure to service it. Financially, politically & logistically that’s a great big fucking mess and so far they have steered clear of biting the bullet. But for how long can they resist?

4. Timing
And here the truth will out … The fact is that Google will become the market leader in digital music, its inevitable! Its just a matter of timing. There are forces at play which all lead back to Google. First up is the ongoing change of culture on the Internet – Web2.0. But what about 3.0 … That’s all about filters. Filtering the information overload so that a user gets only what he wants or needs. Filtering information is the mainstay of Google’s existence and although they currently own the search space, owning the ‘ME’ space is just a few steps down the line for them. Music is a hugely personalised media & is a killer web app – the perfect conditions for Google Music.

Secondly, the current market is still all about iTunes. Its fixed pricing track by track nature is something that wouldn’t attract Google. In the UK 3 new services are already gearing up to compete. First up Nokia, this play is all about dominating the mobile music space and does have a strong element of FIPI (” … frictionless, inexpensive and practically invisible …”). But its too complicated! You get to have how much, for how long and use it with what devices? This will stay a long way from ubiquitious as the humble artists & users came way down the list of priorities when this deal was put together. Remember, don’t be evil! Then there is Sky and its new subscription model of unlimited streams and a fixed number of downloads. On the face of it, this is an attractive proposition if it were not for one thing; P2P. 95% of the digital music market is illegal and free. Faced with this situation subscription has so far failed. And there is built in ‘Friction’ in the restrictions the Sky model imposes on users. The users wants to do download whatever they like in the quantities they like. The Sky offer just doesn’t go far enough. Thirdly, Myspace will launch its music service this week. Currently they can’t even find a CEO to steer this difficult ship. The service is rumoured to feature unlimited streaming coupled with track by track sales & ancilliary music sales such as merchandising & concert tickets. The Myspace play sets heavily on their built-in audience of 120 million users and its traditional focus on music. Can Myspace persuade these people away from the free P2P sites or away from the seductive iPod / iTunes ease of use. I don’t think so, my spidey sense tells me this one has ‘car crash’ written all over it. Big net players have backed away already including Yahoo & MSN. And so far even Amazon have failed to make a serious dent in the drm-free environment. Myspace Music is all about leveraging brand and scale to audience who are looking the other way.

So Google remain in the wings despite have the brand-trust to compete with Apple, the infrastructure to compete with anyone and in China, an active model that competes with illegal P2P sites. Whatever the reason is for Google being in that situation (and I have no inside knowledge from either side of the fence), one thing is for sure. Google never stays in the online wings forever as this chart courtesy of Hitwise unequivically demonstrates; http://weblogs.hitwise.com/us-heather-hopkins/2008/07/google_lively_predictions_goog.html . The notion that if you want to find a tune, you do a Google search for it and are immediately linked to a legal place where you can consume is an extremely powerful one, powerful enough to compete with Steve Job’s device / hardware proposition that will continue to dominate until the consumers are given a better proposition from a service they use daily & trust. Or are enticed away from illegal P2P sites by a legal alternative that works for the users.

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~ by donjenkins on November 22, 2008.

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