Google is circulating a proposal among major record labels for a long-anticipated music service that would include an a la carte digital download store and a subscription-based cloud-based locker, according to industry sources.
The search giant has proposed charging consumers about $25 a year to store songs in the locker, from which they could access their music on an Internet-connected device by either streaming or downloading. Google’s download store would operate like a conventional digital retailer, giving the consumers the ability to purchase individual tracks and digital albums.
But Google locker subscribers would have the additional option of having their purchases transferred directly to their cloud-based account. And the company is seeking the right to provide each customer with the ability to listen to a full-track stream of every song once — as Lala.com did before it was acquired in December by Apple — after which the customer would be limited to a 30-second sample of that song.
The locker would also have social networking features, such as allowing users to send playlists to fellow subscribers, entitling those users to listen to each song in its entirety once. Google would make available a web-based music player and a mobile application for playback of tracks from the cloud-based locker.
Google is seeking an initial three-year licensing agreement from the labels for each territory it launches its music service, although sources say they don’t know where — or when — the service will be launched first.
The final form of a Google music service is bound to change from this initial proposal, which the company has detailed in a term sheet and in meetings with label executives. Some sources say that Google’s proposals represent “a good start,” but others say they will meet plenty of resistance, particularly on issues of compensation.
Representatives at Google couldn’t be immediately reached for comment. Many questions remain unresolved, such as how much storage capacity the locker would provide, whether the labels would grant Google the ability to provide a free full-track stream for the duration of the initial three-year agreement and exactly how — and how much — labels and publishers would be compensated for their music.
Sources say Google has proposed splitting the subscription revenue “50-50” with master rights holders, with music publishers receiving a 10.5% share. But sources say they don’t know whether the publishers’ share would come off the top, with Google and master rights holders splitting the remaining revenue evenly or whether that share would come out of either Google’s share or the master rights holders’ share.
Google’s cloud-based locker would scan a subscriber’s hard drive for music files. Any tracks that Google recognizes as music that it has licensed would be listed by Google as being accessible to the user from their cloud-based account. Such tracks could include those purchased at the Google download store or another download retailer, tracks ripped from a CD and even music files downloaded from peer-to-peer networks.
While the inclusion of P2P tracks may get some pushback from label executives, some sources acknowledge that in order for this concept to work, they may have to allow P2P tracks to populate lockers. But they also point out that in return, the labels would probably press Google to take stronger measures to fight music piracy, such as excluding P2P sites from search results or blocking the use of apps for Google’s Android mobile operating system that facilitate P2P access.
Sources say they don’t know how much Google plans to charge for digital tracks and albums at its download store. But they note that the labels would sell Google music at the conventional wholesale rate of $7 for a digital album and 70 cents for most tracks, 91 cents for superstar tracks and 49 cents for catalog tracks. A 70 cent wholesale download usually retails for 99 cents, while a $7 wholesale digital album typically carries a retail price of $10.