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Google Inc launched a music service on Wednesday that
allows users to listen to unlimited songs for $9.99 a month, challenging
smaller companies like Pandora and Spotify in the market for streaming
music.
With its new service, announced at its annual developers’ conference in
San Francisco, Google has adopted the streaming music business model
ahead of rival Apple Inc, which pioneered online music purchases with
iTunes.
Google’s “All Access” service lets users customize song selections
from 22 genres, ranging from Jazz to Indie music, stream individual
playlists, or listen to a curated, radio-like stream that can be
tweaked. It will be launched for U.S. users first, before being rolled
out to several other countries.
Google unveiled a string of improvements to other services, including
new mapping features and a voice-activated search, at the conference.
The focus was on giving more options to users of mobile devices using
its Android software, the operating system that now runs three out of
every four smartphones sold.
Shares
of Google, the world’s largest Internet search company, jumped more
than 3 percent while Pandora Media Inc shares were down more than 1
percent on Wednesday afternoon.
Google’s new music service amps up the competition in the nascent
market for subscription-based, streaming music. Amazon.com Inc and Apple
are among the Silicon Valley powerhouses sounding out top recording
industry executives, according to sources with knowledge of talks.
Pandora is spending freely and racking up losses to expand globally.
Even social media stalwarts Facebook and Twitter are jumping onto the
streaming-music bandwagon.
All these companies see a viable music streaming and subscription
service as crucial to growing their presence in an exploding mobile
environment. For Google and Apple, it is critical in ensuring users
remain loyal to their mobile products.
With a music service, Google further “locks” consumers into its
sphere of products and services, said Chris Silva, an analyst with
Altimeter Group.
“They’re trying to sell an ecosystem,” he said. “The more things I’m doing, the more things that tie me to Google services.”
At $9.99 a month, Google’s service is costlier than the $3.99 required for Pandora, but on par with Spotify.
The music service features millions of tracks from Universal Music,
Sony Entertainment Group and Warner Music Group, as well as from
thousands of independent labels, according to a Google spokeswoman.
Some analysts said the new service allowed Google to catch-up to
offerings from the likes of Spotify, but did not offer anything unique.
Forrester analyst James McQuivey said combining the service with video
or game content might have made it stand out.
“You don’t dismiss Apple, you don’t dismiss anyone. But that is not
the point,” said Rich Tullo, an analyst at Albert Fried & Co.
“Pandora is the market share leader in the space and their platform is
so disruptive — it’s very hard to disrupt them. When you have 70 million
people use it – they are the disruptors.”
CEO appearance
A procession of Google executives described and showed off a litany
of new features and software updates at the annual “I/O” developers’
conference, from picture touch-ups on Google+ and re-designed Maps that
spot when a user is walking or driving, to Star Trek-like
voice-activated search that understands a users’ sentences and figures
out what he or she is looking for.
“We haven’t seen this rate of change in computing for a long time —
probably not since the birth of personal computing,” said CEO Larry
Page, who began his address reflecting upon a significant moment in his
life, when his father got him into a robotic science fair.
“We’re really only at 1 percent of what’s possible,” said Page, whose
on-stage appearance came a day after he acknowledged suffering from a
rare nerve problem affecting his vocal cords. The problem, which affects
his breathing and makes it difficult for him to speak at length,
sidelined Page from public speaking engagements last summer, though Page
spoke for 45 minutes on stage on Wednesday.
Decrying a “negativity” in the technology industry which he said
impedes progress, Page singled out competitors Microsoft Corp and Oracle
Corp, criticizing the companies for not being sufficiently
collaborative with Google and other companies. Google was sued by Oracle
last year, and companies affiliated with Microsoft have complained
about Google’s practices to European antitrust regulators.
“Most important things are not zero sum,” Page said.
Lack of glass
The conference comes as Google’s Android software has become the most
popular operating system in both smartphones and tablet PCs. Executives
said Wednesday that some 900 million smartphones and tablets running
Google Android software had been activated since the platform’s
inception in 2010
Google’s popular mapping service, a mainstay of Android devices,
features tighter integration with reviews off Zagat, the popular
dining-reviews brand that Google bought last year. It also sports more
pictures from inside important buildings, sourced from user-uploaded
photos. It can now even display the earth realistically as viewed from
outer space, something Page said he personally requested.
Shares in Yelp Inc, which like Zagat is built off users’ personal reviews, slid 3.8 percent to $29.80 in the afternoon.
Conspicuously absent from the more than three-hour opening keynote
session was any mention of Google Glass, the wearable computing device
that the company began distributing to a limited set of early users and
developers last month.
The futuristic-looking device has elicited admiration from many
technology-lovers, but some have questioned whether the stamp-sized
electronic screen mounted on eyeglass frames will appeal to mainstream
consumers.
While many enthusiastic attendees and Google staffers strolled about
the conference center sporting the Glass devices, executives spent
little time discussing it on stage.
Google missed an opportunity to “show that they think they’re onto something big,” said Forrester’s McQuivey.
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