Rumor: Google “Disgusted” With Record Labels
The latest rumor to emerge from the Google campus is that the company’s much anticipated music service is just about at the end of their rope with the major label licensing process. A source close to the negotiations characterizes the search giant as “disgusted” with the labels, so much so that they are seriously considering following Amazon’s lead and launching their music cloud service without label licenses. I’m told that, though very remote and my guess is that it would never come to this, Google may go so far as to shut down the music service project altogether.
Though, as I reported last week, Google is frustrated from the grief they seem to be getting from all of the labels, much of which appears to be coming from WMG. Observers say that WMG has staked its future on the cloud and the label’s head of digital, Michael Nash, is said to be convinced that Google should be charging users $30 a year for the cloud. Google, in response, is said to think that is way too much and wants the first 500 tracks stored by users to be free of charge. At this point the negotiations are said to have gone sideways and Google execs are looking at alternative strategies.
I’m told that this is when the idea of launching without licenses came up. Google may be starting to think that if the industry weren’t going to sue Amazon, then why would they take on Google? After all, who needs whom the most in this scenario? Could you even wrap your brain around the legal costs? As a source pointed out to me, “Larry, Serge and Eric could buy the entire music industry with their personal money”.
Once again, Warner is the fly in the ointment, the same company that praises Spotify one day, renews their licenses for the rest of the world and then the next day doesn’t want to license them in the US.
Billboard’s Glenn Peoples published an analysis of data compiled by the IFPI last week and found that the seven EU countries in which Spotify operates had an average digital growth rate of 43% in 2010. By contrast, the other 8 European countries where Spotify does not operate had an average 9.3% digital growth. The increase in digital growth began with Spotify’s launch in October of 2008 in the UK, France, Spain, Norway, Sweden and Finland. So from Michael Nash’s point of view, it seems that Spotify may be good for the rest of the world, but not good enough for the US.
Makes perfect sense, doesn’t it?