There are numerous reports that Google is about to launch a music service. Whether the rumours have foundation or not I think it is worth reflecting on what role Google could play in digital music and their various assets. Here are some initial thoughts:
Google is already a major player in the online music space via YouTube (in Europe, the home of Spotify, more people watch music video online than listen to streaming music)
Google shouldn’t (and probably won’t) try to be an ‘iTunes killer’. The bottom line is that the iTunes / iPod / iPhone ecosystem is successful within that niche, but it is just that, a niche. The 99 cents download model isn’t a mass market proposition
Google has its Android asset to leverage, potentially ensuring it is a truly cross platform music play
Google is in a unique position to target music demand at the earliest possible stage i.e. when consumers start searching for music
The last point is where I think Google’s core value proposition for the music industry comes in. Apple can do little about iPod owners downloading from BitTorrent (and our survey data shows they are very likely to do so). But Google on the other hand can.Just imagine if when a consumer searches for a song, alongside all of those Torrent results is a heavily integrated Google music offering.
With paid music downloads falling far short of offsetting the impact of declining CD sales, next generation subscription services need to succeed if recorded music sales are ever going to come out of their nose dive.There is certainly lots of supply side activity, with services launched or announced in the last year from, Nokia, Spotify, TDC, Sky, Virgin Media to name but a few. And the incumbents have been busy reworking their offerings (cf Napster’s new 50%-price-cut-with-MP3s play).
Music subscription services have a lot of history but not a huge amount of success, so what gives the current new crop any chance of survival, let alone success?The key will be hiding some or more of the cost to the consumer and adding real value.The bottom line is that many consumers are simply unwilling to pay for music and even fewer are interested in paying a monthly fee for it.So success lies in making the services free or ‘feel like free’ to the end user, subsidizing the costs through savings to, or increased revenue from other core products.TDC, the Danish telco, has pioneered this approach with its free-to-consumer service that is available only to its customers.(A cynic might argue that Spotify is doing the same, subsidizing its free offering with VC funding!)
I am in mourning over the death of Gourmet Magazine. There's a revolution going on on Twitter (follow @savegourmet and search gourmetmagazine to see how it's developing) that I've been contributing to. But I'm taking off my fan hat and putting on my analyst hat to contribute something data-driven to the conversation.
I've been looking at some new, as-yet-unpublished data that I'm using in an upcoming Forrester report on reinventing magazine and newspaper subscriptions. Here's a preview:
And here's the same question cut by subscribers to any of Conde Nast's publications:
In other words, 19% of Conde Nast subscribers think their magazine subscriptions are "surprisingly inexpensive," compared with 13% of US consumers in general. The takeaway: Conde could probably be charging more for its subscriptions.