Why A Facebook-HTC Phone Could Help Google Music
-- A successful Facebook phone could end up lending a helping hand to Google Music, the combo MP3 store-cloud music locker launched this year.
According to a report at the Wall Street Journal's All Things D blog, Facebook has selected mobile phone manufacturer HTC to jointly develop a smartphone with a heavy emphasis on the social network. The phone will reportedly run a version of the Android operating system that has been customized by Facebook for this phone.
Because the Facebook-HTC phone will run Android, any user of the device is one less user of an iPhone. And because Google Music works only on Android phones, the music service will see its potential user base increase as more people buy Facebook-HTC phones. The more people use Android, the less likely they are to buy music at iTunes and use Apple's iCloud service.
The timing of phone's debut -- 12 to 18 months away, according to the report -- could work out well for Google Music. It will give the service time to improve before Facebook brings in more Android users -- assuming consumers care about a Facebook phone in the first place, of course. Google Music could very well be the right product in five years, but it's not ready for primetime just yet.
Google Music probably isn't going to peal off many -- if any -- Apple customers. iTunes is still the leading music store and Apple products are still the standard for experiencing digital music. It's the de facto tool for music creation, too. In other words, Apple has the music enthusiast and creator markets locked up for the foreseeable future.
But Google Music can go after digital music laggards. There are millions of consumers who have not ventured into digital downloads. Some have dabbled as they continue to buy CDs. And as each year passes, there are more young adults with disposable income buying smartphones.
Apple's iPhone got the early adopters, but Google's Android operating system can target the next wave of smartphone owners. If Facebook can help bring more mobile users to Android, Google Music will have the potential to plug into a larger install base than before.
Google shouldn't be too worried even if early adopters and music aficionados are a lost cause; Google Music still has a huge addressable market. Every bit of research about the U.S. mobile market puts Android at the top of the list. Nielsen has Android's third-quarter market share at 43 percent, well ahead of Apple's iOS (28 percent) and BlackBerry (18 percent). comScore put Android's share at 44.8 percent during the third quarter.
If the laggards go to the purchase-and-store-in-the-cloud model of Google rather than the access model of Spotify, Google Music could be well positioned for market share in digital music.
Streaming Services Don't Pay Artists, Labels Do
-- It's great to see Fast Company acknowledging the digital supply chain in an article about streaming services. It makes the same logical point I made last month: streaming services don't pay artists; the artist's labels pay artists.
As Mog CEO David Hyman told Fast Company, he has "no idea" and "no control" over what artists get from the royalties paid by his company. Rhapsody president Jon Irwin effectively said the same thing in a Billboard guest post last month. He trusts artists are getting paid, but like other services Rhapsody is focused on offering a good listening experience and paying rights owners their agreed-upon share of revenue.
Hyman told Fast Company he doesn't know why indies are upset about the amount of royalties they are getting from services. But he did offer one theory: "Maybe because nobody is listening to their music."
Music Services Still Benefitting From Facebook
-- Some online music services continue to enjoy a lift due to their partnership with Facebook.
Mog has grown to 200,000 MAU from 120,000 in the last month, according to AppData. Rdio has dropped to 60,000 MAU from 70,000 in late October. Songza, a non-interactive playlist service, had a short burst to 20,000 MAU but is currently at 10,000 MAU, the same level as one month ago.