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.
Tomorrow, Barnes & Noble (B&N) is expected to announce its own B&N-branded eReader device--the Nook, as the Wall Street Journal reported this evening. The device is expected to be wireless and touch-operated, with dual screens--a 6" E Ink display for reading, and a smaller color LCD screen for navigation, video, and...ads?
In other words, the B&N eReader could be a Kindle and an iPhone put together.
I knew from conversations with my own sources that this would be a cool device, but I didn't expect that it would be priced, as the WSJ reports, at $259. This puts the Nook competing squarely with Amazon's Kindle 2--most likely with a razor thin margin, if any, for B&N. To steal market share from Amazon and make up for lost time, B&N is pricing the Nook as aggressively as possible.
Getting the price right is crucial to success in this emerging device market. As we published earlier this year, most consumers expect eReaders to be $99 or less. But we expected something in the range of $399, which would make the device competitive with the other touch + wireless eReaders on the market, the Sony Daily Edition and the iRex DR800SG, both of which will be sold at Best Buy among other retailers. Pricing the Nook a full $140 below these other devices sends a strong signal that B&N is focused on Amazon, not Sony, as competition.