Resnikoff’s Parting Shot: Why the Cloud Is Already Free

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Music fans already have enough music.

What they need is a smart system for accessing and updating their existing collections from anywhere.  And that is exactly what Google just announced.  Sure, this helps Google and Android, but it does little to generate extra cash for labels and other rightsholders.

In fact, Apple is likely to toss something similar into the ring.  Apple speculation is a nasty beast, though the Lala ingestion is looking like another gratis cloud enhancement.  This is about getting music anywhere with total ease, not about generating extra purchases or access fees.

But what about Google’s Android Market?  Go ahead, buy a download.  The option will be there, but this will remain a paid-for periphery.  Currently, paid downloads represent five percent of total music downloads (according to the IFPI), and neither Google nor Apple have a compelling business interest in changing that.

Welcome to the cloud.  It’s free.  And labels are just starting to realize it.

But wait.  What about app versions of Spotify, MOG, and Rhapsody?  This is the ‘next big thing’ the industry wants, but just like traditional subscriptions, the compelling offer is still competing with free.

This is not to say that MOG’s $10 app doesn’t have an audience.  It does.  But the brief history of digital music suggests that consumers won’t pay en masse.  Instead, they’ll flock to the least complicated, least expensive (ie, mostly free) option. They’ve already ripped and swapped thousands of songs, thanks partly to a road paved by broadbands ISPs.  Now, they want more out of those collections.

And Google, Apple, mSpot, and everyone else is happy not only to oblige, but to build that future.  But what do labels and publishers do about this?  Do they let another huge opportunity go unmonetized?  Do they allow another seismic consumer shift to happen without them?

Actually, major labels are currently trying to bend Apple over ahead of its cloud-based release.  But sue Apple?  According to one insider, labels are most likely to rattle the sabers and extract some sort of fee, then move on.

And Google?  Actually, a critical structural distinction must be made here.  Instead of tapping into a third-party server, the Simplify solution allows users to access their desktop collections directly.  In many ways, this is a simpler construction, and Google has the infrastructure chops to get this done.  But what this means is that Google is not creating another file – either through metadata identification or direct duplication.  This is very difficult to sue, and a much different legal proposition.

And, do you really want to sue Google?  Get into the courtroom crosshairs with Apple?  Just look at how long it took the labels to tackle LimeWire.  And Google is no LimeWire, that is for sure, just ask Viacom.  But Google is a company that just pushed ‘go’ on a massive, free infrastructure for redistributing music anywhere.  And that means more trouble for paid.

Paul Resnikoff, Publisher.