Storms Ahead for "Cloud" Music?

Google’s new music service heralds the arrival of a major player in the digital music market. Sure, internet-based services like Rhapsody have been around for some time, and everyone across the pond seems to love Spotify, but Google has the scale, brand recognition and resources to truly shake up the space. That is, if the service manages to attract and retain consumers. For many people, iTunes has defined digital music, but a broader set of functionality in one service — from downloads to streaming access to customizable radio stations — could make Google Music a strong competitor to Apple. But is this what Google is offering?

Not at the moment. Google’s platform as it stands is not the service many — even Google — were hoping for. The idea is simple: Google gives you server space. You upload your own music onto it. After its uploaded, you can play it on your computer or smartphone whenever you want. So-called “locker” systems have been around for a while, and it’s pretty unlikely Google would take such pains to build a service and quit here.

It seems clear that Google had something a bit bigger in store. But what, exactly? Rumors about the service covered all the bases: it was a subscription platform like Rhapsody; a scan-and-match locker service; a targeted radio station like Pandora; a download store with more peripheral features; or some combination of all of these. Any speculation remains just that: due to difficult negotiations with record labels, Google is holding off on introducing any ground-breaking stuff… at least for now.

So what’s the hold up? Music has already helped build corporate empires, and has been a digital commodity for over a decade. With Internet-based sites and services already commonplace, shouldn’t it have been easy for a big company like Google to get in the game? Well, that might have been the case if they were looking to just reproduce the iTunes storefront. Google’s vision for a music service — whatever it may have been — triggered intense disagreements with rightsholders over payouts and licensing terms.

At this point we should say that our concern with any service that makes money from music is that it fairly compensates musicians. We love technology and innovation as much as the next scrappy nonprofit, but it’s the artists themselves that we truly care about. We’re currently in the middle of a major research project around Artist Revenue Streams, but it’s too early to draw any hard and fast conclusions about how digital services compare to other income generators like touring, terrestrial radio royalties and money made from the sales of physical goods, like CDs or related merchandise. We have seen several reports on the minuscule payouts to even superstar artists from say, streaming services, but none that put this sliver of revenue in context with other factors. So stay tuned for more on how musicians are being compensated in an ever-evolving landscape for music.

But let’s get back to Google. To understand why the service launched as-is, it might be helpful to consider other digital media outlets in the marketplace.

We can start with iTunes. Apple’s shop was largely possible and successful because it functions so much like a physical record store. Record stores buy physical albums and sell them to consumers. The consumers then own that recording and can listen to it as much as they want. Some of the money from consumers goes to the store for exchange for housing its inventory (like a furniture store that sells sofas), and the rest goes back to record labels, who in turn pay performers, songwriters and publishers according to contract and licensing terms. While there are some important differences between iTunes and your local Virgin Megastore (like infinite shelf space), the concept pretty much the same. iTunes sells a digital version of that CD, and most of the rights and compensation structures are similar.

Then came Internet radio. Unlike iTunes, which sells a copy of a song that the purchaser owns for good, Internet radio broadcasts music like its over-the-air counterpart. Listeners have no control over the specific songs played, which is why even a taste-customizable service like Pandora is still basically a radio station. Pandora pays for public performances the same way radio stations have for years. (The difference is that terrestrial radio only compensates songwriters and publishers; webcasters like Pandora also pay performers and labels via SoundExchange.)

These two models were successful because they adopted long-standing methods and tweaked them just a bit. Google likely wanted to introduce a service that didn’t fit neatly in these other frameworks. Our guess is that the company might have intended to offer a scan-and-match locker service that scans your music library for albums you already own and plays the track you select from their “cloud” catalog.

So what we have — for now — is very similar to what Amazon made available a few weeks ago remote storage for your music collection, which allows you to access the songs from anywhere you can connect. There are still legal questions regarding these services, which we won’t get into here, but we plan to revisit that issue in a future article. We’re really interested in what musicians and fans think about these new services. Let us know in the comments!

Submitted by Scott on May 12, 2011 - 2:45pm


2 comments posted

As and indie music company

Submitted by Googleillegaldownlads (not verified) on May 13, 2011 - 11:58am.

As and indie music company I'm going to take my futue of music button and smash it to bits since this group seems unable to understand that stealing music is a crime in the U.S and consumers are being sued right now for this very crime. Btw the industry is mostly indies and google has made little to no effort reaching out to us.

I have to wonder if someone illegally used your art/work if you would be so timid in response.

These comments are not very

Submitted by Casey on May 13, 2011 - 1:10pm.

These comments are not very productive, but we will reply at the very least to inform you that many of us at Future of Music are independent musicians, independent label owners, or both. So the characterization of us as not understanding the indie perspective is utterly incorrect. We also work regularly with the A2IM, the indie label trade group. Finally, this article is not about unauthorized filesharing or unlawful downloading -- it is about business models, licensing and artist compensation. Did you miss the paragraph where we said that the thing we care most about is equitable pay for artists on ANY platform? The law defines liabilities for online services like Google, and if you have an issue with current definitions, you should perhaps work towards affecting change in legislation, which may be a more productive channel for your energies.

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