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Google Gets Closer To Music


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Speculation was rife last week about a soon to be announced (Wednesday this week 28th October 2010) service involving Google’s search technology and a number of different music streaming and a-la-carte retailers. According to insiders speaking to the Wall Street Journal (link), the music will be provided in the form of free, embedded streams from either lala.com or iLike.com (Ars Technica). Yet from reports it seems the streams will not be full tracks but just snippets of each track.

Getting down to business though, TMV thought it apt to examine the implications for music content owners as well as the different digital music retailers within the online ecosystem. Firstly with, large names being thrown about including the likes of iLike, Lala, iTunes and Amazon, where does this leave smaller niche digital retailers? If all the big services are going to receive preferential treatment in terms of search results for music streams and digital retailers, why should smaller niche players spend SEM money on Google AdWords? It seems pretty clear; Google would push them aside, in terms of search preferences.

Issues of parity for not only independent content owners but also independent digital music retailers need to be answered by Google. If the new service only launches with the aforementioned service partners it will create large gaps in terms of newer services entering the market and the access they have to consumers via search engines such as Google. Whilst yes undoubtedly this new initiative from Google is great news for the music industry and all of the services mentioned as being partnered up to it. Yet what will the impact be on newer less-established services and their ability to secure new users via search?

How can the humble music fan/consumer be sure the search information they input into Google, comes back with the most unbiased, relevant and cost-effective streaming or a-la-carte service? Google will no doubt argue that it is not hosting the music and it will be the services partnered at launch that will handle streams or a-la-carte fulfilment. Subsequently, this fits well with Google’s insistence “that it has no intention of getting into the content business” (mediamemo.com). Hmmm, so YouTube is not in the content business? Could have fooled me….

TMV have no problem with the overall concept of the new service. Yet it does seem to pose very serious market entry issues for smaller streaming services and a-la-carte music retailers. It would appear that they would be at a disadvantage in comparison to their larger more established competitors. Google will no doubt counter that they “will not be selling downloads or offering subscriptions (CNET news)”, as it will be the aforementioned service partners handling that side of the service. This is exactly TMV’s point! It favors certain services delivering streams or a-la-carte sales over others.

On the question of whether this is a going to be a game changer in terms of a direct challenge to Apple’s iTunes service, TMV would have to state NO. Going further Michael Gartenberg, VP of Strategy and Analysis at Interpret LLC has stated “anyone who says this is a game changer is crazy…it’s not going to drive more users to iTunes or Amazon. It probably won’t impact Pandora or Last.fm. It’s just one more reason why people will stay within Google. At best, it’s an interesting way to preview a song that’s stuck in your head” (Arts technical).

It has been confirmed that revenue sharing is involved, between Google, the aforementioned partners and content owners. All in all, it means Google is looking at keeping people within its Google search engine ecosystem longer, and is hence a more direct competitive play to Microsoft’s Bing search service, in TMVs view.

The fact companies like Medianet who power services like iLike are involved ensures that there will also be a lot of dynamic independent content as well. Strangely, iLike just recently purchased by MySpace has deals with certain large independent record labels whereas MySpace Music has still not secured a deal with independent label representative Merlin. Even still stranger MySpace Music within its press releases still quotes IODA and The Orchard as being the indies representative.

Let’s get something clear MySpace Music: IODA and The Orchard, yes have large catalogues, however they do not represent or distribute digital content for the likes of Beggars Group, Domino Records and many others. So, whilst these aggregator’s possess large catalogues, are they the catalogues that actually sell in big numbers? These aggregators do provide a service and it is an important one in terms of enabling many unknown artists and small independent labels to gain a foot in the digital music value chain door.

However, it is also important that all these new digital music services understand that parity at a content owner level needs to be respected. Going further this also needs to be carried through to ensure new music services are not cut off from important search traffic to their services.

On a final note, speculation has been rife in terms of the services name and whether it will be Google Music, Google Audio of Google OneBox. TMV’s money is on Google Audio. Going further we view this as just the first step in Google’s inevitable move into the music content business (despite their insistence of this not being the case) especially as an engagement that will no doubt also permeate Android and its app store expansion in the future





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