Why Facebook Is The Real Winner With Google’s Mediocre Music Strategy

The digital music market is not in a great place right now and is in need of some major change: CD sales are still shrinking more quickly than digital revenues are growing; doubts are growing over the freemium model; overall consumer adoption remains niche.  So what do Google do? They launch another download store.  Come on Google, you are one of the Internet’s giants.  You thrive upon disrupting markets, and all you do is launch a me-too download store with an unlicensed locker feature?!

The labels and Google must both shoulder blame for the underwhelming outcome

Of course some of the blame has to be laid at the feet of the labels for restricting what services can aspire to with their current licensing structures.  But Google must equally shoulder the blame for not pushing harder and for not offering the labels more in return (and I’m not talking cash).  I’m told that Google had planned to go to market with something much more ambitious but couldn’t get the licenses (or perhaps at the prices they were willing to pay).  Google is arguably the most important digital conduit in the world.  If Google is unable to bring that influence to bear in negotiations then what hope is there for start-ups?  Google really should have pushed harder, until they got something truly amazing to work with.

But even that isn’t an excuse that Google can really hide behind either.  Take a look at what Facebook achieved without having to sign a single licensing deal.  To use the clichéd management consultant saying, Facebook thought ‘out of the box’.  Google meanwhile didn’t so much as think within in it as let the labels tape them into it.

Facebook is gatecrashing the Triple A party

A while ago I wrote a piece talking about the Triple A of digital music (Apple, Android, Amazon) and the increasing consolidation of the market around them.  Those three players are the ones who bring the scale and stability that the major record labels so keenly crave and those are the three that the licensed service space is increasingly consolidating around.  And yet Facebook’s subtly brilliant strategy of becoming the universal content dashboard looks increasingly like being the smartest play on the board.  While everyone outside the Triple A falls over themselves to become a part of Facebook’s coalition of unaligned powers, Facebook quietly becomes arguably the single most important force in digital music by:

  • collecting all of this fantastic music consumption data from a diverse range of music services
  • subverting the brands of those services to Facebook’s own brand
  • making logging in via Facebook and experiencing music within Facebook so convenient it becomes the mode of choice

So while Amazon and Google run around trying to beat Apple at the download game (which by the way, without closed device ecosystems they’ll always come second) Facebook avoids having to deal with labels, brings something new to the digital music equation and quietly builds the data foundations of something potentially transformational to launch further down the line.

Google forgot it was a 21st Century Portal

Facebook can do all this because it is has such massive reach and scale, because as one of the two doorways into our online lives, it is one of the two true 21st Century Portals, that knows and shapes our activity.  The other 21stCentury Portal?  Google.  (See chart).  Google could have done so much more, with or without licences (and I mean legitimately by the way).  Indeed the music industry needs Google to do so much more. Of course the store will be a success. They have such a massive addressable audience they’d really have to screw up not to make it some sort of success.  But Google needs to think whether it wants its digital music success to be measured in terms of download store market share, or something much bigger, something transformational.  The simple question is, do they want to be Apple or do they want to be Facebook?

About these ads

16 thoughts on “Why Facebook Is The Real Winner With Google’s Mediocre Music Strategy

  1. But they are not musical entrepreneurs! Thats not their field. BUT, I guess nowadays the tech and music industries are becoming intertwined, like u said.

    What would you have done if you were in their shoes?

  2. All the dramatic format changes in music have come from technology companies not music companies (the gramaphone / phonograph, compact cassette, CD, MP3, MP3 players etc. etc.). So it is appropriate to expect a technology company to drive the next innovation. Difference is now that if the equivalent of current digital licensing practices were applied in 1877 when the first phonograph was made it would almost certainly never have made it to market.

    As for what I wished Google had done. Some of the following:
    - a next generation music product that leverages YouTube / Vevo, interactivity, gaming, social, mashups, live footage into an integrated whole

  3. Interesting points but quite a supercilious post considering they just launched the service. My guess is they have some sort of game plan!

    I personally think they’re in a good position to pwn all the other download services.

  4. Facebook have similarly only recently launched their strategy but it is clearly of a different league than Google’s. Google will argue, in the same way Nokia did, that they need to start off simple with a download store and then build from there. Not only did it not get Nokia very far it is also a false wisdom. It is analogous to saying that as a new manufacturer of MP3 players you should start off with a scroll wheel model before moving onto touch screens.

    Perhaps more interesting in all this debate is where it leaves Google’s partners. Google have put themselves in a similar position to Microsoft when they launched Zune. Up until that stage just about every music service that wasn’t Apple used Windows DRM. Msft got tired of waiting for their partners being able to get one over Apple so went straight into the fight themselves and thus became their partners’ competitor over night.

    Google’s Android device partners are all busy investing in their own music services or paying for partnerships. Where does this leave them? Also where does it leave a consumer? Imagine a new owner of a Sony Ericsson android smartphone on Vodafone in the UK. Which music service do they use? Sony’s? Vodafone’s? Or Google’s?

    Google are pursuing a worst-of-both-worlds ecosystem strategy. They lack the control of Apple’s closed ecosystem, but are alienating open-ecosystem partners by trying to do what you would do in a closed ecosystem.

  5. I don’t really get comparing what google are doing to what facebook are doing, as they’re such different services.

    Google can move on to integrate “listen”, “buy” and “save to your cloud storage” links into their search results. They can also integrate them with youtube videos.

    I think it’s far too early to suggest that Google are doing it wrong. You can’t forget they have the ubiquitous search engine and streaming site at their disposal.

  6. All of the above are exactly why I think Google has fallen short. Most online music discovery journeys start with a Google search. How that isn’t at the core of their music offering I don’t know. And I know the labels wanted more on that front too.

    As for YouTube, remember that they don’t own most of the major content anymore, Vevo does. Instead they license that vevo content back into YouTube. You can make an absolutely valid argument that they also provide the audience – they do – but the fact remains that Vevo is now the entity that licenses from the labels, not YouTube.

  7. I agree with you. Too late for a store, but i think that it´s too risky to google fail in the music market. Google music is a natural step if you think that google is the place where people search music (more since spotify change his model)

  8. Just to be clear, at no stage have I said Google will fail. Indeed I included these words in my post:

    “Of course the store will be a success. They have such a massive addressable audience they’d really have to screw up not to make it some sort of success. ”

    What I am arguing for is a dramatic upscaling of strategic ambition.

  9. Pingback: Why Facebook is the Real Winner with Google’s Mediocre Music Strategy | kickshuffle

  10. I’m not convinced Google lacks strategic ambition. When they want to do something, they tend to keep at it until they get it right or they buy whoever got it right.

  11. Mark, wars are won and lost on smaller battles. In this context, Facebook may appear to be the winner short term, but long term Google will eventually come out ahead. The reasons for this are both complex and simple. On the complex side, the controversy surrounding streaming rates and payouts to rightsholders is a very real issue and could ultimately undermine Facebook’s foray into music. As rightholders continue to issue takedown notices and remove their content from streaming services, both the value of their service and relevance in Facebook’s ecosystem to its short and long term growth strategies (and revenues) will change as well. For Facebook and its partners, a “you’re not the same person I married moment” could arrive sooner than later. Google’s ultimate music download store competitors are Amazon and Apple, not Facebook. Both Amazon and Apples’ have long lacked optimum search, discovery, and social tools within their stores. As Google is the king of search, building a music store based around elements of search and discovery makes sense and was only a matter to time. Most, if not all vertical industries incorporating Google’s search engine generate revenue on both sides. The potential revenue derived from a Google Music Store incorporating elements tied to its core business will eventually add up to more than just fractions of pennies on a play and or stream.

    @710Digital

  12. Pingback: The Digital Music Year That Was: 2011 in Review and 2012 Predictions

  13. Pingback: Weekend Music News Roundup for 1/14/2012 |

  14. Pingback: Why Twitter #music Should Only Be Considered a Small First Step

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s