Today In Music: Labels still looking forward to Google Music, Spotify less so

January 6, 2011

So 2010 was the year that wasn’t as far as a major revolutionary digital music launches were concerned. Label executives have been hoping fervently for some real competition to take on Apple’s iTunes. Not that they don’t want iTunes to do very well but having one company control 70 percent of recorded music sales in your biggest markets like the US and UK is perhaps not best for industry growth.

Andy Rubin GoogleThis has meant that whenever it looks like there could be real competition — remember the hopes for Microsoft’s Zune? There’s always been an overreaction from the labels in the hype department. Remember how Amazon would be a true digital rival? Today it’s market share hovers around the 15 percent mark.

So when Google started talking to labels about a music servicethe labels got very excited. So far we know Google has proposed a download store and a digital music locker which will allow you to access music you own wherever you are. They had hoped to have it up and running by Christmas but dealing with labels takes time. In the meantime Google has been getting its house in order for become more a content middle-man media company by promising to work harder on issues like copyright.This is likely because it would like to have more mainstream content for its Android wireless phones and tablets if it is to be a more complete competitor to Apple’s iTunes/iPhone/iPad/iOS ecosystem.  We’re hearing the labels are still very confident that Google will get something up and running sooner rather than later despite the delays. Google is also still looking for people to run its music service, though negotiations have been led by Android founder and Google VP of engineering Andy Rubin (pictured, above).

daniel_ek_closeupThe prognosis for a Spotify US launch is far less positive despite plenty of promise from the European darling of digital music, the labels and Spotify are still far apart on reaching a deal. At issue is the usual old thing: money. Basically, Spotify wants to launch with its free to air service with adverts and hope to make money for itself and the labels by converting users to paying for its slick intuitive service. We’re hearing that the labels, who have done similar streaming deals with a whole range of players like Rhapsody, Napster, MoG and Slacker are not keen to bear the brunt of the risk. In other words offer to pay us more upfront and we can talk.

The labels other concern of course is that if they cut Spotify too favorable a deal they run the risk the likes of Apple and Amazon could turn around and demand similar terms since arguably a free to air service undermines the value of downloads.

Privately some executives are critical of Spotify CEO Daniel Ek’s (pictured, at right) cocksure public promises  it would launch in the US in 2010 even while negotiations were still going on — and not really getting anywhere significant.

Whichever side of the debate you sit one things clear it  might take even longer than thought for Spotify to get its show on the road here in the US.

(Photo of Rubin: Reuters; Ek courtesy of Spotify)

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