Ever since Google officially unveiled Google Play Music All Access at I/O, some have been wondering how Google managed to beat Apple to the punch in launching a streaming music service. Greg Sandoval at The Verge puts his finger a big part of it, noting that Google’s service closely resembles Spotify, whereas Apple is said to be looking to launch something more closely modeled on Pandora. And the record companies and music publishers hate Pandora:
The record companies and music publishers don’t want another web radio service that satisfies a lot of music consumption but doesn’t pay them much. “It’s very important that new digital services pay songwriters and music publishers a fair share of the money,” said David Israelite, president of the National Music Publishers Association, which is not involved in the negotiations. Israelite has been vocal about what he believes are the inequities in compensation between the labels and publishers. “We can not repeat the disaster that was Pandora where songwriters were asked to take a tiny fraction of the revenue.”
But Google has also been greasing the skids for deal for months. As far back as February, Google was reported to be in talks with Vevo about investing $50 million in the music video service currently owned by Universal Music Group and Sony Music for a stake said to be under 10 percent. That would value Vevo at north of $500 million.
As Janko Roettgers noted at GigaOM, that would help keep Vevo’s music videos on YouTube, where they’re among the video sites most popular content. But Universal also reportedly wants out of Vevo. By taking an equity stake in the company, Google would create a liquidity event that ultimately could help Universal divest its stake at a respectable valuation, while buying some goodwill for itself in the process.
Not surprisingly, Universal was reportedly the first label to sign on to Google Play Music All Access.