Google leaves major labels at negotiating table with Music beta launch
During day 2 of their 2011 I/O conference, Google announced the official introduction of their cloud-based music locker service, Google Music. Google’s service comes on the heels of March’s Amazon Cloud Player launch, and is still in beta and invite-only.
Google had been shopping a licensed, subscription-based deal to the labels without much success. Amazon’s launch seems to have forced Google’s hand, and they decided to march on without their cooperation. Jamie Rosenberg, director for digital content for Android, said “a couple major labels” were responsible for the deal never materializing, insisting their terms did not allow the development of a sustainable product.
Billboard points the finger at Sony and Universal:
“Sources tell Billboard that Sony Music Group and Universal Music Group proved the bottlenecks in this case. Google wanted to offer a scan-and-match style locker service — where instead of uploading different copies of the same track to store in a locker for each users, the service would scan users’ libraries and match the songs they own to a centralized server, paying rightsholders for each stream.”
But whoever is to blame, both Google and Amazon’s services bring intriguing legal questions to mind. The two Web giants believe they don’t need licenses because the service they provide is simply a digital storage “locker,” storing content the user already owns. Rosenberg likened it to the “way that you would put songs on an iPad or you would put songs on a backup hard drive.”
And it’s true; much in the way that Apple doesn’t require a license to have users import their own music (say, ripped from a CD) into iTunes, iPhones, iPods and iPads, Google argues that they don’t need one either.
Additionally, there’s no way to determine if that music was purchased new, bought at a used record store, copied from a friend or downloaded via Bit Torrent. Even with digital watermarking and spectral analysis, it’s currently impossible to determine the legality of digital music sourced from physical CDs. Early album leaks are an exception, since advance copies have watermarks are unique to each person they are sent to. Digitally purchased files can easily be linked to the account–and concordantly, the person–they were purchased by, but CDs cannot.
Since mp3s ripped from retail CDs are by far the most common files on P2p networks, it doesn’t seem like Google (or Amazon, for that matter) will be able to prevent users from putting their pirated music on their servers. So far the labels haven’t had much of a response other than to say they were “disappointed and exploring their legal options.”
Music pirates aside, Google’s lack of major label licenses has forced them to reimagine their player as a companion to music retailers rather than become one themselves. In this regard, Amazon—with their a la carte deal from the labels already in place—has the clear advantage.
The deal that Google shopped to the labels was based on the all-you-can-eat subscription model, rapidly catching on in Europe with Spotify (U.S. based efforts like Rhapsody have not). The UK-based cloud music service charges 10 euro a month to stream everything to virtually any device, but it’s currently unavailable in the U.S. and has experienced resistance from the labels, much like Google. In response to the labels’ cash demands for the free version of Spotify, the company has been slowly scaling back access for non-paying users, something Google could consider if Spotify successfully launches in the U.S.
Google’s beta launch still gives them time to work out their subscription model with the labels, and looming digital music giant Apple’s $1B data center earmarked for iTunes and Mobile Me hints at their own cloud music service. Even cloud storage startup Dropbox offers a similar service (they can play cloud-stored music and video on mobile devices) and could theoretically compete in the cloud storage media player space.
Expect these services to evolve rapidly over the next couple of years, as the labels are dragged kicking and screaming into the future of digital music sales.