1

Editor’s Notebook: Google’s hasty freemium play

google play free musicYesterday Google announced it was introducing a free-listening, Internet radio-style component to its Google Play service. The new feature will round out a music experience that already includes paid downloads, cloud storage of owned music, and on-demand listening for a subscription fee.

The announcement, coming mere days before arch-competitor Apple launches its Apple Music project on June 30, was widely viewed as a positioning tactic that adds a no-cost, lean-back platform that Apple has staunchly refused to include in Apple Music.

Apple, meanwhile, is primarily focused on Spotify, as the world’s fiercest competitor in the subscription music game. Spotify has sold premium music subscriptions to 20-million people, a number that far exceeds the efforts of Rhapsody, Deezer, Rdio, and Beats Music (Apple-owned predecessor of Apple Music).

Google’s new initiative puts a friendly consumer-facing listening outpost in front of its subscription offering, and in a blog post positioned the ad-supported radio service as an on-ramp to full subscription: “We hope you’ll enjoy it so much that you’ll consider subscribing to Google Play Music to play without ads, take your music offline, create your own playlists, and listen to any of the 30 million songs in our library on any device and as much as you’d like.”

That is the essential pitch of freemium: It’s a free taste of what you’ll get with a paid subscription. Spotify has succeeded with that on-ramp, probably by offering more interactivity in its freemium plan, which allows users to stream one artist’s entire discography on demand. It’s that level of control which angers some musicians and labels, and is the reported crux of Spotify/label negotiations. In the furor surrounding Taylor Swift’s withdrawal from Spotify, freemium became a hot-potato word. No brand reputation manager in music wants to advertise the word freemium.

But it is really Spotify’s brand of freemium which is a flame point for the record industry, and which Apple is conscientiously separating from. The truth is, Apple has freemium too, already in place — it is iTunes Radio. That non-interactive service, along with Google’s new play, market-leader Pandora, and many others, uses statutory licensing regulated by the U.S. government. Spotify’s freemium plan is attached to an interactive service which licenses music through open-market negotiation.

What we really see here are the world’s two major mobile operating systems (Apple’s iOS and Google’s Android) each assembling three major music components into a listening suite designed to prevent customers from migrating out of the ecosystem:

  • Downloads plus cloud storage (fading, but still generating money)
  • Ad-supported listening (competes with broadcast radio for lean-back listeners)
  • On-demand subscriptions (competes with the record industry for music collectors)

Nobody thinks there isn’t a big market for freemium. FM radio is a type of freemium — ad-supported, and traditionally an on-ramp to buying singles and albums. Pandora’s 79-million monthly listeners, most of whom don’t bother paying $5/month to scrub the commercials, represent a whole freemium market.

Free listening is here to stay, and might always have the bigger share of ear. Nobody knows what the subscription market can become — whether consumers can overcome the conceptual difficulty of leasing music as they lease TV. Spotify adamantly insists that giving a generous taste of interactivity is the best way to cross users over the conceptual divide. Record labels want the higher margins of paid use now, and want Spotify to try pushing users into paying by choking off the interactive oxygen after a few months. Apple buys into that tactic with the reported three-month trial period for Apple Music.

In the meantime, it was easy for Google to slap a freemium layer on its subscription service — it doesn’t appear to be much more than a re-skinned version of Songza, the activity-based listening platform Google acquired last July.

Brad Hill

One Comment

  1. Hey, Brad,

    Love your article – and you make good points. As I write in another place, Google’s service is a little more than “a re-skinned version of Songza”, though.

    First, Google’s got the distribution, with the Google Music app already installed in millions of Android phones. It’s really hard to for someone else to compete with an app you already have installed. (Mind, it hasn’t helped with either Google+ or Hangouts).

    Second, Google also lets you upload your own music. 50,000 tracks, I believe (because you’ll have legally bought that much, right?) You can even launch ‘radio’ stations from the tracks you upload, too, and other ‘radio’ stations will include those tracks if they’re good fits. So I was enjoying a ‘radio’ service from Google the other day, and it was weaving in Beatles tracks and occasionally some of the bootlegs I have too.

    As ever, I’m loving RAIN. See you in Atlanta!

Leave a Reply

Your email address will not be published. Required fields are marked *