Why Would Google Offer $1B For Music Rights? Because The Return Could Be Much Bigger
from the you-can't-put-a-price-on-freedom dept
It's no secret that Google's music locker service is struggling, but the company still seems committed to making it a success. To do so, they'll need to do big things, and break through the barriers that the record industry places in their path. Music columnist Wayne Rosso reports that an unnamed source told him Google is making bold overtures in that direction, and has offered at least one major record label a $1-billion contract for blanket worldwide rights to their entire catalog (thanks to Colin for sending this in). It's still unconfirmed, but it echos something Glyn wrote last year (which Rosso also refers to) about the possibility of Google or a consortium of internet companies simply buying out the record industry (and noting that Larry Page, Serge Brin and Eric Schmidt could afford to do so with their personal fortunes).
Rosso's source, however, isn't exactly sanguine about the idea:
What, one may ask, is Google thinking? “Who knows,” said the source. “It really doesn’t matter because they would screw it up anyway (referring to the fact that Google’s music service has been less than dazzling). Evidently they have a big content group and they have to have something to do to justify their existence.”
So how have the labels responded? “They’re just shrugging and stringing Google along, trying to keep milking cash out of them”, says the source. “They want the money but on the other hand they hate Google. It really sticks in their craw that Google continues to present links to pirated content at the top of their search results.”
I think that, if true, this says something much different. Google is not trying to "justify" anything—they know that there is tremendous opportunity in the field of online music services if only the labels will loosen the reins a bit. And they are willing to bet billions on that belief. The problem with online music offerings is that the people who design them simply don't think the same way the recording industry does. They want to make cool, useful, engaging services full of both common sense features and innovative ones, deployed on multiple platforms all over the world, fully leveraging the technology that is available—but licensing restrictions interfere with every single step of that process. Design and development are inextricably linked with tedious contract negotiations and the fear of lawsuits. It's extremely difficult to get a good product as a result—and if you do, the labels clamp down to see where they can extract more money from it. If Google is trying to buy blanket licenses with no restrictions at a high price tag, it's because they want to escape that cycle. They want a clear and open playing field on which to build services the way they want to build them, without having to beg the labels for permission at every turn. In a market that has only scratched the surface of the economic possibilities of digital music, such a playing field would be well worth the money.