We Are Just a Search Engine, Honest Guys ;)

Oct 21st

The WSJ reports that as soon as next week Google will begin selling music in the search results:

Google Inc. will soon let users buy songs or listen to them for free, right on its main results page, as part of a broader push to enhance the offerings on the leading search engine, according to several people familiar with the matter.

The music offerings, from four online music services, are to be packaged in what Google calls a "one box" at the top of a results page, similar to the site's presentation of weather and financial results.

To lock up these sorts of deals, some of the largest players in dying markets are given a sweetened deal where Google does not directly generate revenue. But after the deal exists for a few years (and Google becomes a leading destination for that type of media) look for a sharp re-negotiation on pricing. And at that point smaller players better cough up the cash if they want to play.

This is why search is such a powerful market position. Google can wedge themselves at the top of any industry with instant, free, and massive distribution. And they can experiment with the business model and integration while starting off free until they have something that works.

Meanwhile the contracts behind such deals often have a strict NDA. So as long as you trust Google it should end up maybe ok. Except for when it doesn't. In the next couple years this partnering with rights holders and market leaders will hit dozens of markets - further consolidating them. You are either big enough to be #1 or you are #10. If your business model gets crushed when Google starts competing directly against you then it might make sense to invest in other traffic distribution channels and/or other points of differentiation which they can't clone.

Published: October 21, 2009

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Comments

October 21, 2009 - 8:13pm

The one box is Google's way of manually adjusting the search rankings without mass media out-crying about manipulated search results.

If Google were really aggressive about this they could probably make more money from the one box than they do from Adwords.

October 21, 2009 - 8:52pm

So just to clarify, Google is becoming the largest affiliate for these music services? For free...for now

October 21, 2009 - 10:02pm

Right. Free for now...but a few years down the road of course they will turn monetization on. Why wouldn't they?

October 22, 2009 - 2:40am

Probably an interesting idea to short-sell the stock of those companies in this deal. It's obviously a short-sighted play to please investors who only care about the next quarter.

October 22, 2009 - 2:10am

This looks like a step back to how band searches were handled 3 years ago with what is likely to become much better monetization. I tried to figure out who was running the one box music results a few years back when Google was inserting a a one box result that went to a band page along with links to buy albums from Amazon and others.

BTW, did you see Mary Meeker's slide deck from Web 2.0 Summit? The slide on the speed of adoption of the iPhone & iPod touch is really amazing (fastest growing device ever, 57 million units in 2 years) and she sees the growth in the near term for that platform as outperforming anyone's projections. She didn't put a number of iPhones in her projection, but given the current run rate of iPhone sales at around 30 million/year, she seems to be saying 50 or even 60 million wouldn't surprise her. She sees the total market for mobile IP devices at around 10 Billion versus the 1 Billion desktop IP devices in the world.

This huge shift to mobile is going to lead to huge opportunities and hurdles for mobile monetization and music downloads in the One Box seem like the perfect start.

I hear conflicting reports about whether iTunes is in the mix here, but if not, the war between Apple and Google is about to heat up. Anyone else want to start building a search portal for mobile devices?

October 22, 2009 - 2:44am

"She sees the total market for mobile IP devices at around 10 Billion versus the 1 Billion desktop IP devices in the world."

Wouldn't that imply everyone who can afford a phone, having about 2.5 phones? I mean, you have to discount 2-3 billion ish people in central asia, china, india and africa who are too poor for phones.

October 22, 2009 - 4:47am

Kindles, tablets, mp3 players, games, wireless home appliances, cars and lots of other devices are still IP mobile.

Here is a link to Mary Meeker's presentation on TechCrunch. Check slide 32 for the analysis

http://www.techcrunch.com/2009/10/21/how-the-iphone-is-blowing-everyone-...

ps, if you have never seen Mary Meeker, she is amazing. Her deck has more information in 15 minutes than most presenters cover in a lifetime

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