Google launched its long-overdue music store today, roughly eight years into the reign of Apple’s iTunes Store, which just sold its 16 billionth song. Clearly Google has a lot of catching up to do–and that’s just with Apple. Amazon has had a digital music store since 2007 that’s known for its aggressive pricing, while Facebook recently integrated third-party streaming services such as Spotify, Rhapsody, Rdio, and MOG.
Why has Google entered such a saturated market? Call it another battle in the Great Tech War of 2012, with the big four (Google, Facebook, Apple, Amazon) now duking it out over the music industry. But none of these companies are actually expecting to make significant revenues from selling music. They’re interested in bolstering the products the music runs on.
In other words, while Apple controls roughly 70% of the music market, iTunes is largely expected to be a break-even business. The real revenues come from complementary businesses: iTunes helps drive sales of iPods and iPhones; it entices consumers to buy iPads and Macs, so they have access to their music on all their devices in one vertical family of products; and it is soon to drive subscriptions to services like iCloud, which keeps all your music in the cloud accessible from anywhere for an annual fee.
That’s why Google today launched its music store and opened up its Google Music Beta cloud service to the public–not to sell music, but rather to improve the experience of its web and mobile products. Now, users can store up to 20,000 songs online for free, accessible from any web browser. The music can be streamed to most Android devices (tablets and smartphones running Android 2.2+); additionally, if you’re hopping on a plane, music from your library can be pinned to your device, read for offline play.
The point here isn’t necessarily to attack iTunes, though that’s one obvious consequence. There are myriad benefits for Google beyond selling MP3s. The store, launched today in the Android market, will help drive sales of Android devices (though it’s unclear how much money Google will ever make from the OS). Google said it has activated more than 200 million Android devices. Such reach is beneficial for the labels that want to sell more music, and for Google, which wants to sell more Android devices–it’s already adding roughly 550,000 new devices each day now.
Google Music will also bolster consumer use of Google’s cloud services. “Other cloud services think you have to pay to listen to music you already own,” said Google’s Jamie Rosenberg in an explicit swipe at Apple and Amazon. “We don’t.” While free for now, I would expect Google to charge for similar services down the road, especially as it continues to push its cloud-based Chromebooks.
Most importantly, Google Music will add a new social layer to Google+. As demonstrated today, Google Music enables users to share purchased music with friends on Google’s recently launched social network. After purchasing a song, users have the option to recommend music in their Google+ stream. Followers can stream the whole track, and not just some “90-second preview,” said Google in yet another shot at Apple. Plus, the sharing isn’t limited to individual tracks. If you purchase an album, the entire thing can be shared with friends on Google+.
Music might be another “dangerous decoy,” as Farhad Manjoo wrote in his cover story on the Great Tech War, a service outside Google’s primary focus that can have indirect benefits on its core businesses. It’s what Andy Grove might call a complementor. The question here is two-fold: whether Google is too late to the game already with music, and whether music is one too many degrees separated from Google’s core businesses of search and advertising.
But Google couldn’t afford to wait much longer. Yesterday, Apple launched its much anticipated iTunes Match service, which will scan and match your library in the cloud for $25 a year. Amazon released its first media tablet, the Kindle Fire, which is supported by Amazon services like its music store and Cloud Drive. And Facebook last week boasted just how much its open graph is boosting the popularity of startups like Spotify and MOG, which are in turn driving more usership and sharing on Facebook.
No wonder Google seemingly rushed the service out the door with just three of the four major record labels onboard.
[image flickr user viamoi]