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 Nailing music is one way for Google to raise chances of continued
success as people spend more time on mobile devices.
Google's YouTube service has become a low-profile titan in streaming
through the popularity of music videos. Currently, videos must be
chosen one track at a time. YouTube in coming weeks will launch new
subscription and ad-supported YouTube music services able to play
several tracks in a row, a person familiar with the plans said.
Google had been expected to launch the YouTube services by the end
of summer and had offered few details.
Also coming soon: an update of Google's existing $10-a-month All
Access subscription-music streaming service. The new version will
incorporate technology acquired by Google with the purchase of
Songza, a service known for its ability to recommend music, Jamie
Rosenberg, Google's Vice President of Digital Content, said in an
interview.
 The variety of approaches risks confusing consumers, said Alex Luke,
a venture capitalist at The Valley Fund, who has worked as an
executive at music label EMI Music and was the director of music
programming at Apple until 2011.
He argued that the winners in digital music would offer radio-style
programs, downloads and let listeners put together their own
playlists. (For a graphic of music sales see: http://link.reuters.com/fap92w)
“The marketplace hasn’t found itself yet and you’re going to
continue to see the big players like Apple and Google experiment,”
Luke said. "The thing that Google and YouTube both have in their
favor is these huge, active user bases."
The latest music push comes 16 months after Google launched its All
Access subscription service. Industry observers say All Access has
struggled to stand out and set Google into a markedly different
business than the free, ad-supported services that have long
underpinned its success.
Google’s All Access subscription music service likely draws between
500,000 and a few million users, said Mark Mulligan of research and
consulting firm Midia Research. That puts it in the same ranks as
rivals Rhapsody and Deezer, but behind Spotify, which has more than
10 million paying subscribers.
Apple has a Beats subscription streaming service, acquired with the
Beats headphone line in May, and it has free iTunes radio, which
analysts say has not been a breakout success. E-commerce giant
Amazon launched its music service in June, providing streaming of a
limited catalog of music to members of its $99-a-year Prime service.
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The U.S. music market is worth $7 billion but royalty and marketing
expenditures mean most streaming music businesses currently lose
money, according to estimates from Brian Zisk, executive producer of
the SF MusicTech Summit.
Mulligan described Google's music service in a "holding pattern",
arguing that Google should be at least as big as Spotify given
Google's resources and existing user base.
Google’s Rosenberg acknowledged the service is not the market
leader, but said Google was encouraged by what he called a "very
healthy" portion of consumers who subscribed after a free one-month
trial. He saw no need to cut the $10 monthly subscription price.
“Is the bigger upside getting more people to try these services, or
is the bigger upside dropping the price by a dollar or two?" he
asked. "Right now we’re focused on creating broad awareness that the
service exists." All Access is now available in 43 countries, he
said.
To stand out, Google envisions a service "that extends seamlessly to
your wearable device or to your car," and that's intelligent enough
to play "the right music for the right moment," Rosenberg says.
Marc Ruxin, the Chief Operating Officer of Rdio, a competing,
privately-held streaming service, said Google wanted to use music to
keep its main service, search, top of mind.
“Google like any Internet company is in a war for attention, so they
want as much user time on a daily basis that they can get,” he said.
(Reporting by Alexei Oreskovic; Editing by Sarah McBride and Peter
Henderson)
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