Why Google Has Already Lost Against Spotify…

Google just launched its subscription-based music service, Google Play Music All Access.  And it’s cheaper than Spotify: $7.99 for access to millions of songs, from wherever!

Just one, gigantic problem…





47 Responses

  1. Casey

    Actually I think Google built a pretty solid contender. The ability to combine the music you own with subscription tracks seemlessly is what people have been wanting for years.

  2. David

    Hopeless name, but as for the business model… we shall see. A few reasons for optimism (if you want it to succeed):
    a) Google has the resources to provide an excellent service.
    b) Google is pretty good at search (ho ho..) Plus it has all the data on individual users from its own web search engine. So it is in a better position than any other service to identify what each user might want to hear, before they even know themselves.
    c) Google can promote the service through all its other media. And Google is above all an advertising company.
    d) As a subscription-only service it can outbid freemium services for exclusive content.
    On the negative side, Google is run by tech nerds with no interest in music. But it can hire plenty of expertise.
    One interesting side effect of Google moving into music services (where it actually has to pay for content, unlike YouTube) is that ite will now have a financial interest in suppressing piracy. Of course, it will still have a conflicting interest, since it serves ads to pirate sites, but I have never believed that that was Google’s main motive in facilitating piracy. More important is the ‘slippery slope’ argument, that once it starts blocking search results for pirates, it will come under pressure to block all sorts of other things, like sites facilitating cime and terrorism. Which would never do!

    • Visitor

      “Hopeless name”
      My theory is that you can tell if a band/company/record is going to live or die from the name alone.
      And this is the worst, ever…

      • David

        It isn’t exactly catchy, but at least it has no negative associations, unlike some of the others. Spotify – sounds like spotty. Mog – sounds like mong. Deezer – sounds like teaser. Rdio – sounds like radio, which is fine, except that Rdio isn’t radio. Pandora – reminds us of Pandora’s Box, which wasn’t a good thing. Rara – reminds us of ra-ra skirts and cheerleaders, which is a good thing in its proper place, which unfortunately isn’t promoting a music service.
        But maybe names aren’t that important. ‘Bing’ is a daft name for a search engine – would you name one after an old dead crooner? – but the search engine seems to do OK. And ‘Android’ has associations with creepy science fiction, but Android does OK too.

        • Visitor

          “But maybe names aren’t that important.”
          Hm, I’ve spent months inventing new ones so I like to think they are. 🙂
          But I do hope that Google-What’s-It’s-Name-Again? will succeed.
          For one reason only:
          “One interesting side effect of Google moving into music services (where it actually has to pay for content, unlike YouTube) is that it will now have a financial interest in suppressing piracy.”

          • Visitor

            🙂 Yeah, it’s bad because it’s the last the thing you want to be. But great because it’s short; you can’t beat 1 syllable/4 letters (unless you’re Psy). Bad because it doesn’t say anything about the product. Great because it’s funny. Bad because it makes you think about a bunch of acronyms and irrelevant stuff.
            Guess, it could go either way.

          • Physicist

            Weakly Interacting Massive Particles a.k.a. WIMP is a theoretical particle that could be the main ingredient in dark matter.

  3. Mike McCready
    Mike McCready

    Hi Paul,
    So, if I’m understanding this, you’re saying its the card requirement up front that will cause it to lose. They could try it the other way, by offering the service up front and then discontinuing it if the user doesn’t enter their card before the trial runs out, but given your other recent article about 70% of streaming users being inactive, I don’t know if I would have made a different business decision than Google did. It’s the gym membership model.
    The whole thing sucks if 70% are inactive. But, someone had to make a business judgment call. I’m not so sure this is the wrong model. But the market still being so new, Google can easily pivot if this model doesn’t work, IMHO.

    • Paul Resnikoff
      Paul Resnikoff

      Mike, I’m pointing to a ‘subscription’ marketplace that is now extremely skewed towards free (or, ehem, ‘freemium’) access. Here in the US, Spotify has only placed low walls to completely free access: occassional ads, never an expiration on free access, etc.
      And jump over to YouTube, and there isn’t any wall at all.
      My point is this: if you’re putting a wall upfront, you’re probably pushing your service into a corner. The expectation has been so severely skewed by Spotify. It’s why very good services like Rhapsody remain obscure (and please don’t point to their million subscribers; just ask some people you know and love what a ‘Rhapsody’ is…;))
      Oh, and what about those that don’t have credit cards? Another issue entirely: Muve Music has properly addressed that market, and even Spotify is now doing a pre-paid, ‘pay-as-you-go’ model for those not carrying credit cards.

  4. DMN

    What should Google do instead?
    1. No 1 month free trial?
    2. Free 1 month trial but without having to put in your card info

    Does Netflix allow you to have a 1 month free trial without putting up your card info?
    Does Spotify?
    Does Hulu?

    • Visitor

      It’s not how the free trial is being structured. It’s the presence of a free trial, which is part of a pay-only structure.
      The observation is this: there’s too much free access (or, ‘freemium’ access) to make this impactful. It’s a losing proposition.
      That may be sad to you, but I think it’s now reality in this space.

  5. teags

    No one should be so naive so as to impute that the name choice has that much sway in the success/failure. Sure, there are examples (i.e. Chevy Nova) that the moniker caused grave failure, but that was because the name itself expressed problems with the product. The name is clunky, that’s about it. If they called it “Music service that kind of sucks and makes your songs skip” then yah, that would have been bad.
    Moving on…
    I for one am waiting with bated breath to see how this plays out. I like the business model because
    a) It’s different than the other players and many times disruption is needed to prove success.
    b) Now they don’t have to convince a Free user to sign up and start using and THEN SWITCH, which as Spotify shows takes a lot of effort and only minimal success. Instead they just have to convince, arguably fewer people, to do something once.
    In other words, Spotify at some point sat down and had an equation that said “we predict X signups over Y time” and then they add other variables of when X would switch to X+(paid version). Google just needs X (assuming once credit cards start getting charged, throngs of people don’t disconnect service).
    c) Oversimplification: Because if this works, there’s a chance more artists will get compensated. You can argue details, but as long as Google compensates artists based on ‘Plays’ and as long as any new Google Music Member isn’t just a memeber that quit (insert any other service) than each new member conceivably is helping the artists (even if it’s really, really small $).

    • Visitor

      “No one should be so naive so as to impute that the name choice has that much sway in the success/failure.”
      Several industries (and a lot of money) say you’re wrong…

      • teags

        First, please provide examples and demonstrate how they compare with Google’s situation. You can’t just suggest a causation because “other industries say I’m wrong”. Which ones?
        Make sure you show us how the other companies picked names that were “bad” and how it was in fact these names that caused their products to fail. Be sure to pick names that parallel the choice of Google, i.e. names that didn’t have great sex appeal but simply described the product and seemed awkward to say.
        Then, show how it was the name and not some other factor that caused the product to perform poorly. I even listed a product failure, The Nova, a product whose name led to its failure (in Sout Americaa) and explained how that was a different situation than Google’s.
        Finally, show us how these examples provide adequate correlation to Google and make a strong enough argument to suppose a similar result.
        Frankly, at Day 1 it’s nearly impossible to suppose that Google’s music service will not succeed simply because of their name. The success and failure will be based upon a myriad of factors and focusing on that one, to me, is what seems naive.
        I’m happy to agree with you on other points…if you make any.

        • Visitor

          “You can’t just suggest a causation because “other industries say I’m wrong”. Which ones?”
          Every industry related to branding, marketing, advertising, trademarking — creation-wise, registration-wise and especially protection-wise.
          Nothing is more important than your name. A good one is the most valuable property you can own on this planet.
          Do a little, um, googling. Start with ‘naming firms’, ‘brands’, etc.

          • teags

            When someone counters your argument, you cannot simly reply
            “do some googling” …No, you in fact need to supply the evidence and the argumentation.
            My argument : The name chosen by Google for it’s new music service will not bare great significance in its success
            Your argument : Yes it will, because names are important.
            Listen, I’ll give you one more chance and then I’m done with this thread.
            A) You didn’t provide anything to respond to my arguments, just a couple of general statements, essentially telling us the importance of good brand awareness. Good for you.
            B) A name and a brand are different things, but can be the same. Take Coca-Cola (it’s both). Whereas something like Ford and the Model-T represent a brand and a product name, respectively. In this instance, the brand is Google, something that has extreme public awareness and loads of goodwill (that’s a business term). The name of the product maybe sucks, but Google still has vast amounts of goodwill from its brand to carry weight and push the product forward.
            C) Now, while their name Google Play Music All Access also includes their name brand one might almost think their name isn’t so bad afterall, since it is in fact their powerful brand that they have associated with their new product. A point you just proved, might I add. Maybe not such a bad choice afterall, eh?
            So, when you say “Nothing is more important than your name. A good one is the most valuable property you can own on this planet.” perhaps you mean a brand. Google isn’t rebranding itself, it’s just naming a new product, a product that will not alter the recognition of Google +/- without due time.
            If you don’t bother making a point this time, with evidence of what you’re trying to prove I won’t respond again.

          • Visitor

            “When someone counters your argument, you cannot simly reply “do some googling””
            Sorry, but that’s really what you’ll want to do. You’re not in a position to discuss the subject in any meaningful way as of now.
            Use the starting points I gave you and it’ll all make sense.

  6. SubFuze

    I disagree with the premise which seems to be that Google Play Music All Access (which *is* a terrible name, by the way) is a failure from its inception because it doesn’t have a free marketing channel by way of a free version of its subscription.
    The problem with that line of thought is that Google *does* have a HUGE free marketing channel by way of its search engine. Every music related search is a chance to market its music service. Every play of a song on YouTube is another touch point.
    Google doesn’t have a free option because it doesn’t need one.

  7. Ted Cohen
    Ted Cohen

    It was very easy for me, I clicked on the sign-up button, it asked if I wanted to bill it to my T-Mobile account, I said yes, then confirmed and I was good to go. Before the free month ends, I need to remember to opt out if I choose to do so. Not intrusive at all.

  8. Visitor

    Has there been any information on how they are paying artists? I enjoy Spotify but refuse to give them money because from everything I’ve read it doesn’t seem to make it’s way to the artists I’m listening to. I would gladly pay for a subscription service where the artists I like receive the money I pay for the music I listen to.

    • Visitor

      Producing the kind of hits we all love can easily cost $100K. Distributing can easily cost 5 times as much.
      It goes without saying that streaming can’t finance that.
      There’s only one way to make sure that people can afford to make new music for you:
      Buy the songs you love!

      • teags

        Let’s try to refrane from making vast generalizations, such as yours with the $100K to make “songs we love”…whichever ones those are.
        It wasn’t so long ago I saw and loved the music by an [ostensibly] homeless man playing songs on a bunch of buckets. I presume his startup costs were close to $0, not to mention distribution. I donated some change. Hell, I’d probably stream him if he was on Spotify. Not sure I’d buy his ablum though.
        Now, while both of our examples (you can’t argue his wasn’t music, nor that I loved it) fall at the extremes of the median and mode costs (the mean can easily misrepresent given the sky rocketed “costs” of some songs, such as Amanda Palmer) to make music. I don’t attempt to convince people mine is norm.
        Your answer, while it does tug at our proverbial heartstrings, just seeks to provide disinformation through exaggeration
        Should people buy albums? Sure. Is that the only way to support an artist? I really hope not.

        • Visitor

          “Let’s try to refrane from making vast generalizations, such as yours with the $100K to make “songs we love”…whichever ones those are.”
          No, no, no — I was not talking about ‘songs we love’!
          The songs you and I love may certainly be the non-commercial, artistic experiments you can produce in Mom’s basement on a stolen copy of Cubase for a few hundred bucks.
          I said, ‘the songs we all love’.
          Those are the songs you find on the charts!
          They reach said charts because we all — except you and a few other connoisseurs, of course — love them.
          And we all love them because they are written, performed, recorded, mixed and mastered by extremely clever people.
          Unfortunately, these extremely clever people are, uh, extremely clever so they insist that we pay them pretty well for their services.
          If we don’t, they’ll just do something else.
          That’s why producing the kind of hits we all love easily can cost $100K.
          And again, streaming can’t finance anything like that.

  9. Jose Luis Zagazzta
    Jose Luis Zagazzta

    Hi Paul,
    I think the move is to look for a more value added position, from the perspective of content owner’s wallets .
    That will depend on a massive figure’s adoption.
    But maybe less paying subscriber’s than millions of freemiums that are not paying so much
    Google movement is deeper i Think
    They’ve already won the free model race with Youtube.
    Why compete in the freemium?

    • Paul Resnikoff
      Paul Resnikoff

      Valid point, though I’m really having problems envisioning a standalone, healthily profitable streaming service in the future. Right now, the space features:
      (1) Wildly high investment levels (Spotify > $300 mm, Deezer > $100 mm, etc.)
      (2) Massively high levels of churn on freemium (> 70 percent abandonment)
      (3) Massively high content costs
      (4) Low levels of attraction on models that force payment (ie, Rhapsody, which is sticking to its paid-only guns but suffering in overall subs as a result)
      (5) Extremely low payouts for artists (and, even labels: majors are extracting massive upfront ransoms, though indies reportedly get less).
      (6) Reluctant licensing from certain key artists
      (7) Aggressive cash burn and pressure to flip/dump these companies in a short period of time
      (8) Considerable over-saturation in the space (many players, not enough interested paying consumers)
      (9) Expectation among most consumers that music will be easily-accessible and totally free, making plays like Google Play Music All Access (or whatever it’s called) very difficult.
      (10) …
      Can you help solve this riddle? Perhaps this is a niche space trying to be mainstream, at least when it comes to premium/paid?

      • Paul Resnikoff
        Paul Resnikoff

        Paul, these are all valid points. The music streaming space features all of the above. Which is why Google might be prime for taking over…
        Don’t forget, we are talking about Google. Their stock is at $900. They’re worth close to 300B, with a giant cash hoard of 50B. The words “massively high costs” or “wildly high investments” just don’t apply to them the same way they would a startup.
        Let’s face it. Google can afford to experiment in any market. Throwing a few hundred million at the music streaming space is not a big deal. Google can wait literally years, maybe even a decade or more, for this space to become “healthily profitable”. Maybe that’s the plan. They already employ loss-leader tactics by selling downloads at below-wholesale cost. And, as Mike McCready pointed out, they can easily pivot if some early marketing decisions turn out to be wrong.
        We’ll see how it turns out. I’m with you, i can’t imagine we need yet another music streaming service, especially one that doesn’t offer anything much different. But i’d also imagine the $8 per month will attract some people. Yes, many of today’s music fans are accustomed to free or “freemium”, but as Apple demonstrated 10 years ago, there exists a price that fans are willing to pay for music. Maybe 8 bucks a month is it. Google has the financial muscle to easily outlast all the other players, including Spotify.
        Unless Apple decides to get in the streaming game….good grief!

  10. @Dandanmusicman

    I don’t think the name will kill it…
    It will just be Google…
    Like google maps, google calendar etc….
    We just say google it.
    We dont say “I’ll look your address up on my google maps app… ”
    It will work as every time I go online I start with google, not spotify and not itunes. They come later in the day… But by that time I’ll already be on Google Music….

    • Visitor

      “But by that time I’ll already be on Google Music”
      Hm, I think there’s a thing called Google Play, and another thing (it is another thing, right?) called Google Play Music All Access, but I’m not sure I’ve heard of Google Music.
      It’s a pretty confused company.
      Guess, I prefer iTunes.

  11. Visitor

    Unlike the other commenters, I love Google and I want them to succeed.
    They have been offering the best scan and match music service for the better part of the last couple of years and few people even know about it.
    Hopefully they step their marketing up and really get in the game. The quality of their products is always high. The marketing and positioning, eh, not so much.


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