Google Decides To Face the Music
There are now rumors that Google (GOOG), which already has Google Music, a cloud music service, plans to enter the subscription music business. The company is said to have secured licensing deals with (among others) Sony Music Entertainment and Universal Music Group for YouTube and Google Play.
Google's current music service lets users upload as much as 20,000 purchased songs from the cloud and allows them to listen to them across their Android devices or on the web. But the search giant is not content with this. Google has bigger ambitions.
Google subscription service now puts the company as a direct rival to the likes of Spotify, which has roughly 24 million monthly active users, of which 6 million are paying subscribers. This also raises the question of what this means for Pandora (P). Clearly this doesn't bode well. Although Pandora has been growing impressively, the company is finding it difficult to monetize its ad-based model.
Meanwhile, this certainly raises the profile of Sirius XM (SIRI), which has proven that a subscription model can work. But more importantly, though, Sirius, which has roughly 20 million paying subscribers, should be looked upon as a gold-standard, if not a goldmine.
Google, essentially has beaten Apple (AAPL) to the punch as it has been long rumored that Apple also plans to enter the realm of music streaming. I do wonder, though, when will one of these rival make the bold bid for Sirius' assets.
I once proclaimed that Apple would make this call first. Today, however, I'm not so sure, especially since Google already has a content-sharing agreement with Sirius. As they say in the radio business, "stay tuned."