Google (NASDAQ:GOOG) is about to unveil new subscription music services, as it signed licensing deals with Universal Music Group and Sony (NYSE:SNE) Music Entertainment to use on its Google Play and YouTube platforms, according to theverge.com. The tech giant now has three licensing deals in place, the other being with Warner Music Group.
This deal brings Google a vast array of high-profile artists, with Universal Music Group and Sony Music Entertainment being the two largest record companies.
Based upon initial reports, the Google subscription services will be similar to Spotify.
As for Apple (NASDAQ:AAPL), it's working on a music service that will look more like Pandora (NYSE:P). Google again has positioned itself as a leader among the tech giants, rather than a laggard, which Apple increasingly been acting and responding like. While Google's negotiations with the music labels has been somewhat tedious and slow, Apple's has been even slower.
Concerning the new Google Play service, the New York Times reports it won't include a free tier, citing people familiar with the plans. The Wall Street Journal differed from The Verge on the type of service being offered, saying the paid subscription model will allow access to "whole libraries of songs," lining up with the possibility of there not being a free tier, as suggested by the Times.
Also of interest is the YouTube deal which, contrary to original reports, may not be in place yet. Although it has been suggested YouTube was the deciding factor in the two largest music labels agreeing to the deal with Google.
For the first time since 1999, the music industry had a boost in revenue, gaining 0.3% in 2012. That's on the heels of data showing P2P file sharing peeked in 2005, with a 26% plunge in the amount of music downloaded from P2P sites, and a 25% drop in music filed exchanged from hard drives, according to Cnet.
This is good news for the industry, and shows people don't mind paying for digital music when there is a wide variety of options at the right price.
The real question for all participants in the field, including giant Amazon.com (NASDAQ:AMZN) - which is also working on a device for streaming audio - is how much revenue and earnings will there be in a sector that has struggled to grow. Will brisk competition cut into earnings? At this time it's too early to tell, but smaller players in the field could get hammered, as these services, overall, will only be a small part of the overall revenue of the tech giants entering the field.
For Google, it will garner the most attention among the big tech companies because it is getting in first, as related to the type of services offered. The company already sells individual songs, as do Apple and Amazon.
To me, Google gets the bragging rights here, and again has positioned itself as an aggressive competitor. That, more than anything, may be the most value out of this announcement and deal.
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