Google Wants into Online Music, or, Tilting at Windmills, Part Two

At this point Google is starting to resemble your impressionable, enthusiastic friend who becomes enthralled by every passing trend, obsessively acquires all the accoutrement, then gets bored a couple months later before finally moving on to the next big thing. This mercurial personality type can be recognized by the piles of disused equipment filling their house and garage: rock-climbing, yoga, mountain biking, parasailing, snowboarding -- one by one, they come and go. The only problem with this, of course, is that it costs lots and lots of money.

Google’s latest obsessive flirtation is with music: the search giant now wants to open a licensed music store as part of its new Google+ social network. This puts it into direct competition with other online audio providers like Apple’s iTunes and Pandora. There are apparently some hiccups in Google’s plan: for one thing, the Wall Street Journal reports that major recording companies including Sony Music Entertainment and Warner Music Group are balking at signing agreements with Google to allow music sales.

But probably the main obstacle to Google’s musical ambitions is the fact that other companies are already doing what it wants to do -- namely, Apple and Pandora, whose success probably provided a good part of the motivation for Google’s jump into a field where it has virtually no experience, let alone any sort of real foothold.

Like Google+, which is intended to compete with Facebook, Google’s reasoning is at once self-evident and self-defeating: another platform demonstrates the viability of a particular business model for online content and commerce, encouraging Google to roll out imitation services, which are however likely doomed to remain marginal because, well, that other platform was there first.

The numbers certainly paint a picture of a field overwhelmingly dominated by these popular, powerful incumbents. In the first half of 2010 Apple’s iTunes accounted for 26.7% of all music sales in the U.S., online and otherwise, and 66% of all online music sales at the end of the year; in the first half of 2011, IHS iSuppli estimated that Apple had a market share of 65.8% in online movie sales. Meanwhile in mid-2010 Pandora accounted for 52% of the Internet radio market, which is becoming even more competitive with the rapid growth of other players like Clear Channel Radio’s New iHeartRadio platform.

As with social media, where Facebook already enjoys overwhelming dominance in terms of users and advertising relationships, it’s not clear what game-changing technology or approach Google can bring to unseat the titans of online audio, or why Google execs think this is even a realistic possibility.  But then, that never stopped them before.

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