Music is pleasant to one's ears, but it is likely to be the next battlefield for technology giants Google
Google is planning to launch its own music store, intending to bring an end to the seven-year dominance of Apple's iTunes music store. Apple launched iTunes in 2003 and it now controls about 70% of the market.
Google Vice President of Engineering Andy Rubin, the person behind the search giant's Android platform, is reportedly in talks with several music labels over securing licenses. Rubin is reportedly expecting to run the service by Christmas and plans to settle the talks before the next release of its Android operating system, code named "Gingerbread," due in the fourth quarter of this year.
Though Google has not signed any licensing deal with major labels, it is believed that labels are excited about the prospect of Google entering the music industry.
Google, with its resources, reach, and strong market for its Android platform, could pose a formidable challenge for Apple's iTunes and its entry could possibly change the landscape of the music industry.
Google can offer a number of products and services through its Android platform for mobile phones, as well as through web browsers. Market analysts have said Google could be successful in its latest weapon against Apple, as it gets vital information about people's taste, and what type of music they are searching for, through its search engine platform.
Music labels are welcoming Google's move because it could reduce their dependence on Apple for digital music sales. Google could bring additional revenue streams for music labels and expand the market beyond Apple, amid falling industry revenue.
On a global basis, recorded music revenue dropped 7% in 2009 to $17 billion, according to the International Federation of the Phonographic Industry (IFPI), while the Recording Industry Association of America said music sales in the United States fell 12% to $7.7 billion in 2009.
However, digital music sales rose 9.2% to $4.3 billion, more than 10 times the digital market value in 2004. Digital channels now account for 25.3% of all trade revenues to record companies. In the U.S., digital sales account for nearly half -- 43% -- of the recorded music market, IFPI said.
With Android phone sales surpassing iPhone sales in the first half of the year, Google could bring millions of potential customers to the table. Shipments of smartphones running on the Google-backed Android operating system grew at an incredible rate of 886% in the second quarter, according to research firm Canalys.
According to a data from iSuppli, Android will be used in 75 million smartphones by 2012, up from 5 million in 2009. Meanwhile, iOS usage will amount to 62 million in 2012, up from 25 million in 2009.
By 2012, the global market share of Android will soar from 2.7% in 2009 to 19.4%, while Apple's iOS for the iPhone will see its share rise to 15.9% in 2012, up from 13.8% in 2009, iSuppli said.
Apple has the advantage of having led the market since 2003 -- and that will work in favor of Apple because any product (even from a big firm) takes some gestation period for delivering returns. Amazon.com, one of the leading online retailers, unveiled its MP3 service in 2007 but it has managed to capture only over 10% of the market.
Nonetheless, Google's entry into the music industry would be a significant move for the California-based company. Its competition with Apple's iTunes will be closely watched by the industry.
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