Warner Music Inks Deal With Google for Music Subscription Services

Google is looking to team up with Warner Music Group to offer two new music services.

(from Billboard.biz, March 5, 2013) Google and Warner Music Group have teamed up to form a licensing deal for two new services Google is scheduled to release later this summer. Google is planning on offering two subscription services through its YouTube property and Google Play. Warner Music Group executives have refused to comment.  Google is also negotiating with other companies such as Universal Music Group, Sony Music Entertainment, and other labels to form deals similar to its agreement with Warner.

Google has proposed efforts for on-demand music services since the Financial Times first revealed the intentions in February. On-demand music streaming already has a substantial competitive market, with companies like Spotify and Rhapsody as two of the major contenders among several others.  Beats Electronics is also planning to release a system titled Beats Music, later this summer.

An advantage Google has coming into the market is its YouTube and Android systems. On-demand music services, both free and paid, draw tens of millions of people from all over the world. Google’s YouTube platform sees more than 800 million people every month. Also, Google’s Android smartphone operating system powers 68.4% of all smartphones. Apple’s iOS system only powers 19.4%.

Google plans to offer its YouTube audiences an advertising-free subscription level. For its Google Play customers, it wants to offer its subscribers access to licensed songs that they do not purchase, in addition to the other services already offered.

In regards to its digital music strategy, Warner Music Group has always been an outsider. When Universal Music Group and Sony Entertainment created VEVO, a network that has been successful on YouTube, Warner declined to be a part of the proposal. Warner created its own YouTube station that showcases its artists and is consistently in the top 5 YouTube channels.

Music labels who used to fear the potential of on-demand music services to hurt music sales, are now welcoming the development of music services. The International Federation of the Phonographic Industry has reported an overall growth in music revenue for the first time in the last 14 years and credit much of this growth to digital music services.