The Web search leader's launch of its much anticipated music service for mobile devices and PCs on Tuesday delivers another application to the company's fast-growing Android mobile operating system, but analysts say it falls short of competing with Amazon.com (AMZN) and Apple (AAPL) in the online music field.
Google's "Music Beta by Google," which the company launched at its annual software developer conference in San Francisco, is a free service that lets users download songs from their CD collections to cloud — that is, Web-based — service hosted by Google.
Hugo Barra, Google product management director, speaks at Tuesday's Google I/O show, where the music service and Android were topics. AP View Enlarged Image
The service comes with many features and lets users access and manage their music seamlessly across their Android-powered mobile phones, tablet computers and PCs. For now it's in test mode and available by invitation only.
Unlike Amazon and Apple, Google lacks licensing agreements with record companies that would let Google sell music.
Google a year ago revealed plans to launch a music service.
The company's been slowed by its inability to hammer out agreements with record labels, music publishers and other rights holders, says Mike McGuire, an analyst for research firm Gartner.
"The biggest challenge won't be technology; it's always going to be acquiring the licenses," McGuire said. "It's not just the record companies. You have to deal with publishers, performance rights organizations — there are a lot of stakeholders in this pie, and they all have to be dealt with."
Google is following Amazon, which launched a similar service that lets users store their music on Amazon's cloud service. Amazon is a licensed music seller through its main e-commerce operation. It didn't seek extra agreements with rights holders before launching the cloud service.
Analysts say Google likely didn't need to ink any pacts with music companies — as long as it doesn't sell any music.
Spokespeople from Warner Music Group (WMG) and Universal Music Group didn't respond to emails seeking comment.
The lack of licensing agreements prevents Google from becoming a serious rival to Apple's iTunes store, the No. 1 seller of music online, and Amazon, says Greg Sterling, principal for Sterling Market Intelligence.
"In the absence of selling music, there is no revenue model unless they are going to create an environment in advertising, but that doesn't seem like a big revenue opportunity (at least) for the time being," he said.
Google gets most of its revenue from selling text-based ads that show up near search results and is hoping for a big push from mobile ads. Its Android open-source mobile OS is free, but is geared to work especially well with Google's search and other services.
Read more at http://www.investors.com/NewsAndAnalysis/Article/571796/201105101833/Googles-New-Music-Service-Unaccompanied-By-Licenses.htm
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