Google Trialing Music Playback in Search?

It appears that Google might be experimenting with some form of music playback in search results when using its Chrome browser.  In a number of incidents a song or lyrics has been searched for and after a short delay the responding audio file plays in the background.  When it does so there are no player controls visible nor any other indication that the music is playing, and stopping the music playing sometimes requires not just closing the browser window but exiting Chrome entirely.  This appears to be a very early and limited trial – if indeed that is what this is – as it only occurs on a handful of songs and generally cannot be replicated on the same song by different people nor on different devices.

It is an interesting concept but not without its problems, not least of which is that currently music plays regardless of whether audio is being created by other browser windows.  The rights situation will be interesting too, though one imagines that if this ever gets rolled out it will utilize 30/60 second previews rather than full tracks.

Search has always been the part of Google’s business that the music industry has most wanted Google to do something with, given that it is the most common starting point for illegal downloads. Whether this is what the labels had in mind is another matter….

Google Hits Play On Subscriptions

As expected Google just announced their music subscription service: Google Play Music All Access.  To cut a not-so-long story even shorter, it’s another $9.99 streaming subscription service.  To be fair it looks like a solid offering with clean, mobile optimized flat design aesthetics and some nice features, including:

• ‘radio without rules’: fully editable auto-programmed radio based on tracks your listening to
• blended algorithmic and curated programming
• 30 days free trial
• seamless integration with the cloud locker service

The locker service integration is a great move and transforms a relatively isolated product concept into a natural extension of the music experience.  Of course locker services are a transition product aimed at helping consumers migrate from the ownership mindset to remote access, so the life cycle of the product is inherently limited.

The ‘uniquely Google’ recommendations and discovery are designed to ‘know exactly what you want’.  The proof of the pudding will be in the eating, but there is a risk of creating an ever shrinking filter bubble where the range of recommendations narrows the more the service learns about you.

A Great v1.0 But….

Make no mistake, it looks like a great version 1.0, streets ahead of where its peers were at 1.0.  But is it enough?  There are many things that Google could have done to stand out, including innovative pricing, Google+ and YouTube integration, a Motorola device bundle etc.  But of course Google never needed to push the envelope on this one.

The streaming market is only just getting going with 20 million global paying subscribers in 2012 paling compared to Apple’s half a billion iTunes accounts.  Streaming and subscription accounted for just 20% of global digital revenues in 2012 and only 8% of US digital revenues.  So Google’s view, correctly, is that this is a market waiting to happen, so focus on refining the model rather than reinventing the wheel.  That’s exactly what Apple did in 2003 when it launched the iTunes Music Store.  The market was pretty crowded with download stores back then, but how many people remember any of them now?

But that’s not to say though that Google is going to do for streaming what Apple did for downloads.  In fact it faces a number of key challenges:

• Don’t pay won’t pay? Google’s consumer base is predominately built around ad-funded free access and associate Google with free. Even though it will not be offering a free tier, Google still face the freemium challenge of convincing swathes of free users that they should pay for something.  By contrast Apple has the largest single addressable audience of paid content consumers in the globe.
• Paid subscriptions don’t drive ad revenue: for all of Google’s desire to diversify its business and revenue streams, advertising pays the bills. Whereas initiatives like Android, Google+ and YouTube all help drive advertising, premium subscriptions do not. And given that premium subscriptions are a low margin business, the profit rate Google earns from subscription services will be less than it gets from ad supported consumers, even if total ARPU is higher.  So there seems little reason for All Access to become a strategic priority for Google.
• $9.99 is not a mass market price point: Google’s biggest asset for the labels is its unrivalled scale and reach, the potential to take digital music to the mainstream. But 9.99 is not a mainstream proposition, it is in fact what the top 10% of music buyers spend in the UK.  Spotify et al have done a great job of engaging the higher spending music aficionados, but there is a finite pool of them, especially in the increasingly crowded US market.  Unless Google plans on stealing everyone else’s subscribers it is going to find mid term growth potential limited (though expect some near term surge from pent-up demand among Google aficionados).
• Balkanized organizational siloes: on paper Google has the most fantastic combination of music service assets (Play, YouTube, Google+, Motorola, Android etc.).  Tie all of those assets together into a 360 degree music service and you have a world beater on your hands.  But Google can’t. It can’t because these business units operate so autonomously and because each one has business conflicts and commercial constraints that prevent them from being fully unified.  For example, ‘doing an Apple’ with Motorola and turning it into a closed Google Play ecosystem would alienate Android partners.  While YouTube’s music licenses are wholly different and distinct from Google Play licenses. 

 What’s In A Name?

Let’s assume that Google has got an ambitious roadmap for All Access that will include innovation on price, product and channel, perhaps even rolling version 2.0 within 6 to 9 months.  Even then, all of the above still apply, and it is the organizational challenge that clips Google’s wings the most.  Even the elongated name hints at the organizational quagmire: Google Play Music All Access. Doesn’t roll off the tongue in the way Spotify, Deezer, Rhapsody or Rdio do does it?  ‘All Access’ is the service, ‘Music’ is the division and ‘Play’ is the strategic overlay and of course ‘Google’ is the company.  Just to get to where it has, All Access has had to coalesce numerous internal Google fiefdoms.

Google is Becoming Microsoft

Google is beginning to look for music what Microsoft did 10 years ago.  Up to and beyond the launch of the iTunes Store everyone expected Microsoft to be the dominant player.  It held most of the cards in the deck, including the industry standard media player and DRM system.  Then along came Apple with the aces.  Try as Microsoft might to compete, it simply couldn’t get over itself.  It couldn’t pull together the disparate business units that needed to cooperate and it was scared of harming other revenue streams and relationships. Microsoft feared that if it pushed too hard with its own service it would alienate the business partners that relied on WDRM for their music services.  All this begat strategic paralysis.  Much the same is happening to Google.  Fear of alienating Android partners precludes them from doing-an-Apple with Motorola (which I suggested they should do).  Also, pulling together YouTube, Google+ and Android into the All Access mix appears to be a step too far.

Google is at a similar stage of its corporate evolution as Microsoft was ten years ago.  It is a big company that is still learning how to actually be a big company.  Before Google can fulfill its vast digital music potential it needs to learn how to get the best out of its organizational structure first.

Here’s looking forward to version 2.0.

Why Google are Really Downgrading Pirate Sites

On Friday Google announced that it would start to downgrade the search results of sites which have “high numbers” of copyright takedown notices.  Make no mistake, this is a major step forward and is something record labels have been pushing for.  Over the last year labels and their trade bodies including the RIAA, IFPI and BPI, have shifted some of the emphasis of their anti-piracy efforts from pursuing the symptoms of piracy (e.g. suing file sharers themselves) to tackling piracy at source (e.g. blocking domains and search results).  Though there are ‘freedom-of-Internet-speech’ issues surrounding this approach, it makes sound strategic sense, with a much higher potential degree of effectiveness, and without the PR own-goal of taking your own consumers to court.

But just as domain blocking faces numerous technical challenges such as VPNs and proxy servers (see my previous post for more details) so Google’s search de-prioritization move has chink-filled armour:

• Google’s takedown process is imperfect.   Google has made major strides in working with copyright owners during the last year, with many labels reporting marked improvements in the takedown process.  But the process still has flaws, such as arbitrary limits on the number of claims.  Also the process is resources intensive, both for Google and rights owners.  So takedown efforts and the resulting list of key infringers is going to lean towards the short head rather than the long tail.  Which means the most popular destinations will be hit most while the new up-and-comers will have an opportunity to become established before they feel the effects of downgrading.
• Downgrading will impact individual site audiences relatively slowly. Search result downgrading will also be slow to impact the popular piracy sites whose established user bases will typically go direct to sites via bookmarks or use alternative discovery methods such as torrent trackers.  Downgrading will impact their new user acquisition but existing audiences will dwindle more slowly.
• Why downgrade when you can block? If Google genuinely believes that the target sites warrant downgrading because of copyright infringement, then why only go as far as downgrading?  Why not just all out block?  Just how effective will downgrading be?  Will the results drop down the page? Disappear off the front page?  Or disappear beyond page 20?  (I do not think, though, that there is a case for Google to proactively increase the performance of licensed services as some are pushing for.  Firstly these services should invest more heavily in SEO and SEM like everyone else has to.  Secondly prioritizing results would fly in the face of Google’s entire search business proposition.  And if music sites get a boost then why shouldn’t everyone else? There is strong precedent for Google downgrading – such as the recent link-farm downgrade – but not boosting).
• Some serial infringers are more equal than others. Veteran search guru Danny Sullivan, in typical fashion, managed to uncover a really interesting angle to the story: that Google-owned YouTube will not find itself on the downgrade ‘hitlist’ despite having more takedowns than probably any other site.  Though this certainly smacks of double standards –and raises issues about separation of church and state – there is a pretty compelling case for ensuring YouTube remains readily accessible: namely that it is the #1 digital music app in the world.  (Granted it may cannibalize many more valuable services, but that’s a separate issue that the industry and Google need to fix).

Of course, the entire takedown and downgrading strategy cannot be viewed in isolation.  Google are a reluctant copyright enforcement force, as they make clear by ensuring that every DMCA-complaint blocked search result links through to http://www.chillingeffects.org/  (an Electronic Frontier Federation backed site that helps sites who have had DMCA takedown notices strike back at content owners.)  Google are going down this path of ceding more ground to content owners not because of a strategic change of heart, but because they want something back. Whereas Apple has made paid content a success in the iTunes ecosystem, Google has thus far failed to achieve much in the Android ecosystem.  (Or to put it more accurately, in the various Android ecosystems – which is of course one of the core problems for Google).

You Scratch My Back…

Google Play is Google’s big content play (no pun intended) and they want more in it from content owners, and they want to take it to more territories.  Taking the action that they have done so is designed to make those prickly licensing conversations with rights owners that bit smoother.  And Google may well get a lot of what they want. They’ve pretty much played hard ball so far, taking the position that they can bring more scale to the music industry than any other partner and so should be given preferential terms.  And they back this position up with a pretty good poker face too, as illustrated by their refusal to meet label license fee demands for a point-and-play locker service and instead following Amazon’s lead in launching a DMCA compliant upload-and-play locker service.  Now they can come back to the table with the ‘we’ve done what you asked us to do’ card in their hand.

Music industry, over to you, raise or fold?

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 21^st 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 21^st Century Portals, that knows and shapes our activity.  The other 21^stCentury 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?