Google wants to build a full-service music service that includes a Pandora-like radio function as well as a download store and catalog syncing, sources tell Billboard.biz. Such a product would be far more compelling than the basic, unlicensed music locker service, called Music Beta, the company debuted on Tuesday at the company's annual I/O developers conference.
According to the sources, Universal Music Group is close to a completing a deal while Warner Music Group and EMI had already agreed to terms. Spokespersons for all four majors declined to comment.
Google executives were clearly frustrated with the lack of progress with labels before the company opted to launch Music Beta. "We've been in negotiations with the industry for a different set of features, with mixed results," Google director of content partnerships Zahavah Levine told Billboard before the announcement was made. "[But] a couple of major labels were less focused on innovation and more on demanding unreasonable and unsustainable business terms."
The product Google launched this week is certainly no indication of what Music Beta will eventually become and what the company wants it to become. But there have been road blocks preventing Google from reaching its goal. One industry source told Billboard that negotiations had been stuck over the amount of upfront payments and the royalties to be paid for the non-Internet music streaming aspect of the service.
When Billboard first revealed in September that Google was in discussions with labels about a cloud service, the company had pitched a music locker that would cost consumers about $25 per year and would allow their songs to be accessed on a multitude of Internet-connected devices. Sources said Google also wanted a download store that would automatically store purchases in a user's locker, social features and limited streaming of entire songs. In addition, Google was proposing to share a portion of the annual locker service revenues with rights holders.
The product evolved over time but Google has stuck with much of the original idea. According to one source, the company decided to add the non-interactive streaming feature two to three months ago. The revenue-sharing aspect of the service does not appear to be a part of the current negotiations.
Licenses are necessary for Google to provide a download store, sync a user's music collection to the cloud and add richer features to the service. One label insider told Billboard the company continues to be supportive of the concept of licensed locker services but is hopeful Google will want to license a more robust locker solution. Another source believes the door remains open for Google to launch the service is desires.
But as time passes, Apple is closer to launching its own cloud music service and stealing the thunder in the digital music marketplace. Apple has proven itself able to work with content owners to release its desired products. People within the industry are saying the launch of Music Beta shows Google may not have a similar ability to remain patient through lengthy negotiations. As one label executive put it, "If Apple can get licenses with people, why can't Google?"