Business Matters: When is it Safe to Say Google Music Has Failed?
Business Matters: When is it Safe to Say Google Music Has Failed?

When is it Safe to Say Google Music Has Failed?
-- Google's giant footprint was to give Google Music unparalleled access to music lovers. But according to a report by CNET's Greg Sandoval, Google Music has disappointed industry executives in its 3 short months of existence.

Sandoval's article naturally attracted some attention. Business Insider riffed on CNET's report with the headline, "Google Music is a Flop." "Wow, tough crowd," commented Digital Music News. Time's TechLand blog defended Google Music and hoped for eventual success.

All one can really say about Google Music is that it's got its work cut out. Yes, it's true that Google Music's sales have been a barely perceptible blip on digital music revenues, sources have told in recent weeks. But some labels say the same thing about Spotify and subscription services in general. And remember that's MP3 store started slowly and has managed to make only a small dent in iTunes' market share since its launch in September 2007.

But there's a good reason why Google Music should be judged over the long term: to put it in overly simple terms, right now Apple products are for music buyers and Google products are for music listeners.

There are numerous examples that show that Apple is synonymous with paid digital content. Apple's iTunes music store was the breakthrough music download store and is now the largest music store -- not digital, but all music - in both the U.S. and the entire world. Apple and Google both have cloud-based storage services for music purchases. However, Apple charges $25 a year to store songs that weren't purchased at iTunes while Google Music stores music regardless of the source. In addition, Apple has worked with newspapers and magazines to create iPad apps targeted at paying customers. Google does not have the same reputation for working with content owners to offer products and services people will pay for.

Analytical evidence also exists that shows the difference between Apple and Google customers. In a December 2011 blog post, mobile analytics company Flurry showed that an app generates just 24 cents on Android for every $1 of revenue it generates on Apple's iOS platform. In other words, a developer that makes the same app for both iOS and Android will make just over 4 times as much revenue from iOS as from Android.

Why would Apple customers spend so much more than Android owners? Flurry argued this gap is the result in the consumer's ability - not just willingness - to pay on the two platforms. "This comes down to Google Checkout penetration," wrote Flurry. "Upon setting up an iOS device, a consumer must associate either a credit or gift card to her iTunes account. In theory, this means that 100% of all iOS device users are payment enabled. This has not been the case for Android, resulting in lower revenue generation possibilities on the platform."

In other words, Google needs to be a better facilitator for its revenue-generating services. And that's something the company can achieve - not in a few months, but over a longer period of time. As Flurry notes, Google users don't necessarily have less desire to spend on digital goods, they have fewer opportunities to spend on digital goods. In addition, Google Music should be helped by better mobile integration that will result from Google's acquisition of Motorola. The iTunes-iPhone/iPod experience is second to none for experiencing digital music. For Google Music to blossom, Google will need to create a better hardware/software ecosystem.

Google Getting Out of The Spectrum Biz
-- While Google has become a music seller and is pressing into the hardware business (via its acquisition of Motorola), the company is getting out of the spectrum business. The company said in an SEC filing filed Friday it will sell its 29.4 million shares in wireless service provider Clearwire for $1.60 a share to Clearwire's other investors. The company invested in Clearwire back in 2008 with hopes it would help its plans to build a high-speed network.
( Reuters)

Gibson Guitar: Bureaucratic Irresponsibility or Illegal Logging or Both?

-- Here's an update on a familiar story involving Gibson Guitars and its legal tussle with the Departments of Homeland Security and Fish & Wildlife. The agencies' August 2011 raid on Gibson Guitars for violation of the Lacey Act - regarding the importation of wood to be used in its guitars - made headlines and quickly became a bit of a cause celebe for conservatives and libertarians wary of government overreach into business. But as Reason magazine points out in a video report (below) and online post, no charges have been brought against the company six months after the raid. A clearly frustrated Gibson CEO Henry Juszkiewicz tells Reason the government confiscated a half-million dollars worth of wood but has yet to give the company its day in court. "It just points out that it's not about responsible forestry and sustainable wood or illegal logging, this is about a bureaucratic law…it's a blank check for abuse.