By ETHAN SMITH
Google Inc. is building a music-download store that would work closely with its Google Plus social network and could launch it within the next two weeks, according to people familiar with the matter.
Users of Google Music, as the service is tentatively named, could recommend songs in an online library to Google Plus contacts, who in turn would be allowed to listen to those songs once for free. The songs would then be available for sale as MP3 downloads, probably for around the usual 99 cents each.
Digital music services from Spotify AB and Research in Motion Ltd., too, have recently begun using social networking as a word-of-mouth marketing vehicle. It’s too early to know how successful these efforts are at recruiting new customers and retaining existing ones, people in the music industry say, but add that early signs are encouraging.
Google’s online library is already up and running, under the name Music Beta. A free service, it lets users upload their music collections to remote servers, from which they can then listen to their music from any Internet-connected device.
Executives at Google have told people in the music industry that they plan to start the music download service next week or the following week, even though they are unlikely to secure the rights to sell music from at least two of the four major label groups in time.
The song-recommendation feature would work only for music released by record labels with Google agreements in place.
Launching a music service without the participation of all four major-label companies can be risky. Users can get turned off quickly if they can’t find an artist or a song they want, and the majors distribute more than 87% of the music sold in the U.S. The issue is important enough that most online music services, from Apple Inc.’s iTunes Store in 2003 to Spotify this year, have waited to launch until they had all four of the big music companies on board.
As of last week, Citigroup Inc.’s EMI Group appeared the most likely of the four major-label groups to have a deal in place in time for the Google Music launch.
Vivendi SA’s Universal Music Group, the world’s largest record company, has been holding negotiations with Google but it is unclear whether they will reach a deal before the music service launch, according to a person familiar with the talks.
Two organizations representing independent record labels also were close to Google Music deals, according to people familiar with the matter.
The other majors, Sony Corp.’s Sony Music Entertainment and Access Industries Inc.’s Warner Music Group, were unlikely to license their content to Google in time for the launch. Executives from the two companies have expressed numerous concerns to Google, according to people familiar with their discussions.
Sony executives believe Google doesn’t do enough to curb piracy on its existing sites and services, including YouTube and its Android mobile operating system. They worry that the online locker could appear to be a tacit endorsement of piracy, since it would work equally for pirated songs and purchased ones.
Warner’s main concern is less philosophical, according to these people: The company believes Google’s offer is inadequate. Google’s music locker is free and generates no revenue for record companies. Apple, by contrast, is about to start a music-locker service of its own, iTunes Match, for which it plans to charge $25 a year, sharing proceeds with record labels. Google executives have argued to record companies that their service will generate enough download sales to make up the difference.
Spotify AB, which launched in the U.S. over the summer, last month announced that all new users would need to create their accounts through Facebook. By default, nearly all activity on Spotify, such as listening to music or creating playlists, is automatically published on the user’s Facebook wall. Facebook friends who click on links in those postings are offered an opportunity to sign up for Spotify. Spotify users can disable the sharing feature, but that option is not readily offered.
Spotify is a streaming service that lets users listen to an unlimited amount of music. For the first six months, the music is available for free, with advertising, as long as the user listens on a computer. An ad-free version for smartphones costs $10 a month. After the first six months unlimited computer access costs $5 a month, also without ads.
Spotify has signed up three million new customers since the Facebook integration began in September, according to people who have spoken to Spotify executives. Before the tie-up, Spotify had more than 10 million customers. Since the six-month trial period hasn’t expired for any of those new customers, it’s too soon to know how many will opt to stay and pay. The company currently has an estimated 250,000 paying customers in the U.S., out of two million or more paying customers in the nine countries it operates in.
RIM’s BBM Music promises to let users of its popular BlackBerry Messenger service pay an extra $5 a month to store 50 songs on their handsets and share them with friends. The company calls it a “social music service” that will let users hear more music if they connect to more friends. The service has been in a private testing mode since it was announced in August, but the company hasn’t said when it will become available to the general public.
—Amir Efrati contributed to this article.
Write to Ethan Smith at ethan.smith@wsj.com
Article source: http://online.wsj.com/article/SB10001424052970203752604576645413691297494.html