According to a report from the Wall Street Journal, (s nws) the music service Google (s goog) is close to launching will include sharing features via integration with its Google+ platform, which isn’t that surprising, since Google has said the new social network will be part of everything it does. For Apple(s aapl), however, the new social features in Google’s offering will reinforce what Spotify and other music services have already made obvious: Apple and iTunes are falling behind in the social-music race, which could have significant consequences for the company as the music industry continues to evolve.
By any measure, iTunes is still the 800-pound gorilla of the digital-music industry: More than 10 billion songs have been downloaded since Apple launched the service in 2001, and some record labels and music publishers now get a huge proportion of the revenue they make on their artists from iTunes. By launching the service — along with the iPod, which turned 10 years old on the weekend — Apple effectively re-engineered the entire music industry, convincing the major labels to use it as a conduit to reach music lovers who were busy downloading whatever they could get their hands on.
Obviously, that kind of power means iTunes isn’t going away anytime soon, and it will continue to be the main choice for record companies who want to monetize an artist. But the music business is changing — along with virtually every other form of media and content — as a result of the increasingly social nature of the web. And in that particular race, services such as Spotify are winning, in part because of their integration with networks like Facebook and their focus on streaming over buying.
Streaming and sharing is the new downloading
Facebook and Spotify have gotten a lot of criticism since the social network launched its “frictionless sharing” features, which allow services like Spotify to publish sharing info to a user’s Facebook page without having to ask permission every time. Many users have complained about this behavior — and that Spotify requires that anyone signing up have a Facebook account to connect to — and some have no doubt cancelled their accounts, but they are likely in the minority. In the end, this new kind of sharing, which shows links to what friends are listening to in the “ticker” stream on a user’s page, could be a hugely powerful driver for the industry.
And what kinds of weapons does Apple have? It has its massive market dominance — and it has Ping. Remember Ping? Apple’s music-based social network launched last fall, and was designed to do something similar to what Spotify and others are now doing: make it easy for users to share their activity and convince others to buy music. Except that Ping almost instantly looked like a social network from the late 1990s rather than a contender for the music-sharing future: as GigaOM’s Cyndy Aleo argued at the time, it looked lame in part because it wasn’t connected to anything else, and it made sharing surprisingly cumbersome (for his part, Om said that he thought Ping was part of “the future of social commerce”).
Ping shone a spotlight on one of Apple’s major weaknesses, which is a lack of knowledge or experience with social networks or social behavior. The company’s products are famous for their brilliant design and usability, but virtually none of that applies to things like Ping or Apple’s Game Center network (or to iTunes itself, arguably) since both seem more like ghost towns and afterthoughts than powerful competitors.
Twitter integration may not be enough
In an attempt to bolt on some form of social behavior, Apple added support for Twitter to Ping, and more recently it has integrated Twitter into many of its apps and services through iOS 5 — a ground-breaking move, since it rarely gives that kind of preferential treatment and real estate to a third party. (It tried to negotiate a Facebook deal but was rebuffed, presumably because of Spotify). This was a smart decision, since Twitter accomplishes much of what iTunes and Ping do not: Users can easily send out links to what they have bought or are listening to, and those links appear in the “media pane” at Twitter’s website and can be easily clicked on.
Despite this, however, it still feels like Apple is fundamentally playing catch-up in an industry that is moving rapidly towards sharing and streaming of music rather than simply purchasing, a la iTunes. With social services like Spotify and Rdio and MOG — not to mention Turntable.fm and Soundtracking — it is all about sharing music with friends rather than just acquiring it to keep forever. So how is Apple going to compete in this new kind of landscape? It will soon launch a streaming feature called iTunes Match, but the social element continues to elude it.
For the time being, at least, iTunes will remain the store of choice for many when it comes to buying music. And those who see their friends listening to music via Spotify and want to buy the same track may go to iTunes to do so — but then again, they might not. And if Google and Facebook integrate support for instant payments via Google Checkout or Facebook Credits, what kind of draw will Apple or iTunes have for new users then? The market dominance that Steve Jobs so brilliantly executed continues for now, but that dominance looks more and more precarious every day.