Biggest Music Business News of 2009: Welcome Google!

I think this week's news about Google launching a music service, “OneBox,” could well be the biggest music business news of 2009. Considering the number of partnerships that were made, I can’t believe that the rumors stayed under wraps for this long while everybody was caught up in Facebook & Spotify talk over the last couple months.

Some people are speculating that Google will merely introduce their version of Yahoo!'s music service that launched over a year ago. I think Google has a much greater chance to succeed considering their growth and all of Yahoo!'s distractions. The mere fact that the most popular site on the internet is finally becoming directly involved in the music space is a BIG deal (Google-owned YouTube has become their indirect entry over time).

I personally think Google is asking for more trouble than they’re looking for by jumping into the complicated music streaming space, but I am ecstatic to see them make a splash as it will open the doors for greater competition and more opportunities. As Paul Bonanos noted in his GigaOm writeup, “Google might buy rather than build.” I think he nailed it and that enhances the future prospects for companies like mine (Rank ‘em) and many more.

Google has been the default music search engine for a while now. It makes complete sense for them to get involved in the space, but it won’t happen without some difficulties. The major record labels have been holding on to the outdated 20^th Century business model, and they have made unreasonable (and few) concessions in royalty rates to make many music startups (especailly those focused built upon streaming) viable businesses.

Google understands the Freemium model as well as anybody, and they will have a strong impact on the rest of the industry. I feel confident that the labels will change their ways soon enough, and iTunes won’t be able to justify the silly $1.29 price point for digital downloads for much longer. Music is moving towards FREE (I personally believe the ideal price point is $.25, but I’ll discuss that in another writeup), and I have high hopes that the 95% of all music consumed that is not paid for will trend significantly downward. Overall, I think it’s great to see Google (and Facebook) jumping into the exciting digital music revolution, and the music business is surely looking up!

iTunes New Pricing Scheme -> Bring On The Competition!

It's April 7, 2009 and iTunes just introduced their new pricing scheme. You would think that signals a good thing, but not so fast. Starting today, you will find many of your favorite songs for $1.29, a 30% hike on the former price tag.

Let me start off by saying music is moving towards free. I won't say it's there yet, but it's sure inching closer. Why would iTunes be moving in the opposite direction?

It must be a natural heuristic that items <$1 are met without much consumer deliberation. Yet, once you cross the dollar threshold, you've entered an entirely new ballgame. I speak as a consumer within their target demographic! If I was ever willing to purchase singles for convenience purposes at $.99, I am a lot more tempted to deal with the "hassle" of pirating the material now.

It may just be a $.30 increase, but it sure feels like a $3 change. Have they not read the recent reports that indicated 95% of music consumed in 2008 was "illegally" downloaded? Are they really hoping to  bring that percentage down?

It's also funny & ironic to note how much I dislike the move to $1.29, but I commend the move to $.69 for some deeper catalogue material. Yet, I'm holding full judgement until I see exactly what percentage of the tracks see the $.69 price point. Additionally, this factor will not keep their customers from seeking alternatives.

Speaking of alternatives, I have been raving about the Amazon MP3 Store since it was initially introduced in October 2007. They have been offering "variable pricing" since day one, as well as DRM-Free content (less restrictions) & better bit rates (sound quality). The store also possesses a cleaner interface and such additional advantages as the ability to "preview all" of an artist's tracks at once compared with manually clicking one at a time on iTunes. 

It's a shame that most people don't understand that downloads from Amazon sync seamlessly with your iTunes library after your initial purchase.

Despite iTunes holding a ~80% market share of the digital paid download space, they better watch out for Amazon. Although pressure from the major record labels had influence over the new pricing scheme, iTunes just opened up the door for their first legitimate competitor in the six year existence. 

If that's the moral of the story, I guess that works for me. Here's to competition!