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An Indepth Look at The Potential Of Google’s Highly Anticipated “Music Service”

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Thomas Houston of online Tech trade magazine Theverge.com was the first to  break the story  on what is being described as “The Go To Event”.  Though specific details are limited, and appear to be on a need to know basis, The Verge is confidently trumpeted to the rest of us  that this event being held is for  Google’s developing “Google music”. Like it was discussed in previous reports, “Google Music” is suspected to be Google’s online music service with, “a twist”, that is expected to be a part of Google’s Google+  Google has declined to commenton specifics, leaving many of us eagerly waiting for the event later today.

In response to the buzz, CNet.com has music industry sources hinting at licensing  agreement details. With aid from their sources,  Cnet indicates that Google is proceeding with the launch of its music service without  currently having  agreements with  Sony Music Entertainment, and Warner Music Group. The word is that negotiations have been going on for some time now, and labels are in favor of Google entering the music game, it is simply a matter of each of the companies coming to terms that they think are fair.

Though they are the number 2 and 3 largest music companies in the country, odds are that coming to an agreement with Google will only be a matter of time for Sony and Warner. This is because deal precedence has already been set by  the industry’s largest major label conglomerate, Universal Music Group. This is important to note because historically UMG’s agreement’s with Google create a pattern that companies like Warner and Sony soon follow.  Therefore UMG’s recent agreement represents a strong possibility for  change in the structure of how digital music is bought, sold and promoted.

To see Google’s track record in this vain, all one needs to do is look at the music industry’s growing use of use of its subsidiary, Youtube. While the copyright aspects have been continually in debate, Google has consciously evolved Youtube’s direction to become an essential element for promoting music, or media of any kind.  Such a structure  fits in perfectly with Google’s plans to create a music service with a social networking attached via it’s Google+.  The “Google Twist” that brings it all together is the rumor that Google+ users will be able to use the network to distribute music from the music service to fellow Google+ using friends. According to the rumor, each of those friends would then get a free promotional listen of songs sent by Google+ friends as part of this new music service.  This will allow Google to extend its role in the “pollination” of a song to its audience beyond the circulation of music videos and low quality song clips on Youtube.

Similar to Spotify’s arrangement with Facebook, Google+ appears to be setting up to create a digitally enhanced word of mouth promotional system within its network of users.  In return, the logical assumption is that it will aid in stimulating online impulse buys via this music service’s “ITunes Like” functions.  However, Google’s apparent difference from Spotify and ITunes, is that through their shier size and influence, they will be able eventually take a systematic  approach in having a hands on role in every stage of promoting and and selling music and music related material.

To see this trend already in action all one needs to do it take a closer look at the strategies associated with Google and Youtube’s recent corporate moves.  The first major example is Google and Youtube’s game changing partnership with Vevo in 2009.  As we have discussed in previous articles, partnering with Vevo allowed Youtube and Google to lend its dominance to Vevo owners and licensees like Universal Music Group, Sony Music Entertainment, EMI, and Disney.  Through this game changing alliance  Google was able to really help them dominate in online promotional circulation. This Vevo spearheaded dominance set an unofficial standard in online music marketing. The stabilizing of that standard coincided with Warner Music Group eventually dropping their law suit inspired avoidance of Youtube, with its labels striking up their own deals with asimilar business model as  Vevo.

Now if we fast forward to 2011, Google and Youtube have spun off that model’s success into content licensing on a broader scale.  In March Google acquired pioneering broadband channel and viral video marketing master house, Next New Networks. (Next New Networks is known best for featuring stand out clips from producers, “Auto Tune The New”s, Obama Girl, and Epic Rap Battles Of History.)  Now within relatively recent days, Google has issued over 1,400 “Vevo like” licensing deals to  independent labels, and finalized Youtube content production budget for celebrities like Madonna, and Pharrell Williams.

This tells us that while they are going to use the success of these models to develop a wide variety of high quality  short form videos, mainstream music serves as Youtube, and therefore Google’s very logical and tangible back bone of easily viewed and legally licensed content.  To see how all of this would relate to Google+ and its mysterious music component, all one needs to do is take a step back and recognize Google+, Google Music, and  Youtube as different arms of the same body. Pre-music licensing  and Vevo, Youtube was a essentially an  advanced home movie distributor that shot up in popularity by hosting copyright infringed videos on such a high scale that it earned them a $2 billion law suit with MTV owning media giant Viacom.  If Google+ and Google Music were also forced to stand alone, they would have the daunting reality of competing with their perspective market dominators, Facebook, Spotify, ITunes, and Amazon.com. However, by working all of these elements together, in conjunction with the plans  and agendas of their licensing record label partners, they have a systematic tactical advantage that could make them  an invaluable facilitator of the digital record industry.  All music fans would have to do is continue to use Youtube and Google at a reliably growing rate. Since that’s exactly what’s already happening, we’ll just have to wait and see if Google lives up to the potential we think it has. If done right this could be the start of something big. Theverge.com will be airing Google’s highly antificpated Google Music press conference at 2pm Pacific Time live from LA.  We will keep you up to date on the story as it develops.