Google music service starts Wednesday, steals march on Apple

By Alexei Oreskovic and Edwin Chan

SAN FRANCISCO (Reuters) – Google Inc launched a music service on Wednesday that allows users to listen to unlimited songs for $9.99 a month, challenging smaller companies like Pandora and Spotify in the market for streaming music.

With its new service, announced at its annual developers’ conference in San Francisco, Google has adopted the streaming music business model ahead of rival Apple Inc, which pioneered online music purchases with iTunes.

Google’s “All Access” service lets users customize song selections from 22 genres, ranging from Jazz to Indie music, stream individual playlists, or listen to a curated, radio-like stream that can be tweaked. It will be launched for U.S. users first, before being rolled out to several other countries.

Google shares jumped $18.90, or more than 2 percent, to $906. Pandora shares slipped 0.4 percent to $16.68 on the New York Stock Exchange.

The entry of the world’s largest Internet company amps up the competition as major technology giants jostle for position in the nascent market for subscription-based, streaming music. Inc and Apple are among the Silicon Valley powerhouses sounding out top recording industry executives, according to sources with knowledge of talks and media reports.

Pandora is spending freely and racking up losses to expand globally. Even social media stalwarts Facebook and Twitter are jumping onto the streaming-music bandwagon.

All these companies see a viable music streaming and subscription service as crucial to growing their presence in an exploding mobile environment. For Google and Apple, it is critical in ensuring users remain loyal to their mobile products.

Music has been integral to the mobile experience since the early days of iTunes, which upended the old models with its 99-cent-per-song buying approach.

Now, as smartphones and tablets supplant PCs and virtual storage replaces songs on devices, mobile players from handset makers to social networks realize they must stake out a place or risk ceding control of one of the largest components of mobile device usage.

At $9.99 a month, the service is costlier than the $3.99 required for Pandora, but on par with Spotify.

Google executives argued their new service takes the work out of managing massive music libraries, in part because the streaming-model can be endlessly customized. The company will also have a hand in music selection, acting as a curator of personalized content.

It’s unclear how large the library will be for streaming. Tech blog, The Verge, reported Tuesday that Google had signed deals with Universal Music and Sony Entertainment Group, two of the world’s largest record labels.


The new music service was among the highlights of the company’s annual developers’ conference, a venue in the past for major hardware unveilings as well as important updates to Google’s family of software. On Wednesday, various executives described updates to everything from Google+, the company’s fledgling social network, to its gaming development platform.

Many of those updates are designed to enable Google’s products to work better on Android and other mobile platforms, and help its crucial community of developers craft the applications that are the mobile operating system’s lifeblood.

New features described on Wednesday ran the gamut from a new Google “Hangouts” video conferencing and messaging app, to better support for pictures and a redesign of the core “stream” that users first see on Google+.

Executives said Wednesday that some 900 million smartphones and tablets running Google Android software had been activated since the platform’s inception in 2010.

Revenue from Android, the software used by Samsung and other mobile device makers that competes with Apple, is also gaining momentum. Google executives said revenue per user for Android applications developers is now 2-1/2 times its year-earlier level.

Roughly 5,500 software developers are attending this year’s “Google I/O” convention at San Francisco’s Moscone Center from Wednesday through Friday.

(Editing by David Gregorio and Bernadette Baum)

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