Original URL: https://www.theregister.com/2010/06/16/google_music_store/
Breaking Google's last taboo
From search to selling bits
Posted in Legal, 16th June 2010 12:02 GMT
Google has traditionally charged into other business areas with all the subtlety of a bull in a china shop. This isn't always a bad thing: there are plenty of cosy industries that are ripe for a shake-up, and advertising is one of the cosiest. But there's one area that's been strictly taboo.
Google has always linked to other people's stuff, and stayed out of retailing bits itself. Over time it's blurred that line, without ever really crossing it. This was a line that Microsoft never really crossed either, although Windows Marketplaces were announced, then came and went phut, as regularly as Service Packs.
Now we can confirm that Google is gearing up for a Music Store - CNet's Greg Sandoval hears this could be upon us as soon as the autumn, it may decide this high-minded distinction is no longer one worth preserving. The rumours strongly suggest Google will be integrating music into search - no surprise, there - but there's plenty of speculation that it will go the final step, and retail the music directly.
Let's put aside for a moment the China experience, where Google - with the full blessing of the major labels - launched a free MP3 download service, entirely supported by ads. This was a very unusual situation, where China's dominant search portal Baidu was serving up MP3s without a license, hosted on an ever-changing network of obscure domains that nobody else could reach. Rights holders aren't about to repeat the experience here - and with a market of willing buyers, there's no reason why they should. So disregard it as a precedent.
The reason for Google's reluctance to sell digital bits is pretty obvious: its market dominance as a search engine puts it directly into competition with online retailers, and puts them at a potentially crippling disadvantage. If Google is the first port of calling for getting to stuff on the web, why would anyone find a second? Google takes you directly to the checkout. It spells the end for any online retailer without massive scale, and the brand and resources to match.
But you can see the thinking, here, even if you don't approve. For some time Google has eyed the rise of price comparison sites with some irritation. What value do they add, a Googler might ask? Most are little more than crummy pseudo-editorial sites, in the pocket of the largest vendors. Surely a classic case for intervention by algorithm. Well those price comparison sites are already earmarked for extinction and few will mourn their passing - they don't really add much value. But then again, that doesn't mean Google will be pushing out the bits itself. It may simply subsume price comparison into its existing apparatus.
And once again a Googler might ask - why on earth go the extra step? It's not as if the Chocolate Factory wants to sell you lawnmowers or TVs, the high-margin end of Amazon's business. It's only an MP3. In terms of scale, the world's music is somewhere between 25 million and 35 million MP3s, but then only a small proportion of that really matters to a mass market retailer - you'll recall the study that showed that of 12 million songs in (what we assume to be) the iTunes catalog only 3 million sold a copy in one year. Google has plenty of capacity and bandwidth - why not remove the extra step and sell it directly?
It has demonstrated how. Three weeks ago Google unveiled a section of the Android Market that sells music. (Yes, the Android store is Google's only example of selling bits itself.) From the China experiment, Google knows who to call. Whether it wants to is another thing. For any global operator acquiring rights is a world of pain - the music business is still territorial, and the fragmentation of music publishing rights means it can take weeks or even months of work simply to find who owns what. This is not a problem an algorithm can answer.
Google is now so large it could probably buy the entire sound recording industry for small change - certainly less than a quarter's revenue. Even if it does, the licensing headache doesn't go away. So it will certainly be more effective for Google to employ an intermediary to sort this out.
If Google were to employ the same ruthless approach to music as it did with books, Google Music could be a serious challenger not just to every music retailer on the planet, but every producer and rights owner too. We'll have to see if the company has been chastised by the experience, in which governments eventually turned against the landgrab. I suspect it hasn't. ®