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Google’s plan to take on iTunes, Spotify welcomed

Paul Smith (via AFR) | Feb. 28, 2013
Music industry executives and analysts have cautiously welcomed reports that online search giant Google is planning a major blitz on Apple’s iTunes and streaming services like Spotify, with the launch of its own music streaming service.

 

Google’s plan to take on iTunes, Spotify welcomed

Photo: Getty

 

Music industry executives and analysts have cautiously welcomed reports that online search giant Google is planning a major blitz on Apple's iTunes and streaming services like Spotify, with the launch of its own music streaming service.

Reports first emerged on Bloomberg that Google was in negotiations with major record labels to license their music for a new subscription-based service.

The move would create major waves in the global music industry, which this week, was revealed by the International Federation of the Phonographic Industry to have had its first increase in annual sales since 1999, largely due to a 9 per cent increase in digital revenues.

Google is reportedly planning a third quarter release for its, as yet unnamed, service which has the potential to harness the enormous amount of content freely available on its YouTube video site, to draw in subscribers. The Bloomberg report cited insiders who said the service would work on all mobile devices, not just those running Google's Android operating system.

The music industry began turning around its problems with digital piracy in part because of the success of Apple's iTunes Store, which provided a structured model for people to pay for music online. Streaming services like Spotify,Rdio and online radio service Pandora, work on a subscription basis, giving customers access to huge music libraries, without ever actually owning the tracks. Apple is also rumoured to be planning its own streaming service.

Speaking at an industry event in London, and reported by The Guardian, global head of digital business at Universal Music Group, Francis Keeling, said the move had the potential of converting the millions of internet users that listened to free music through Google's current services, into paying online customers.

"We talk about for subscription services, the need to have a funnel. Google, with its hundreds of millions of users through search, YouTube with its more than 800 million users, arguably is the biggest funnel we could have," Mr Keeling said.

"Clearly if we could get consumers into a legal funnel through that route and encourage them to subscription, that would have a very positive impact on the business."

Significant Move

Consumer analyst at technology research firm Ovum, Mark Little, said if Google could negotiate a deal that embeds the new service in Android and fully leverage other assets like You Tube, then it had the potential to take a significant slice of the $US5.6 billion digital music market, while making a dent in Spotify and Apple's iTunes growth.

 

Mr Little said previous, and ongoing copyright disputes between Google and the music industry over infringements related to search rankings indicated that negotiating the setup of its new service would not be plain sailing.

 

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