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(Amazon Cloud Player vs Apple iCloud vs Google Music) By Tracy Boyer Clark, 11/23/2011 Executive Summary The music industry has evolved immensely over the past 50 years to a sector that is now based on three key consumer needs: 1) digital file types with on-the-go access, 2) remote streaming and storage, and 3) shared access for a social experience. The invention of the MP3 player satisfied the first need. Cloud technologies are now satisfying the latter two needs. However, the music cloud war is an intense rivalry amongst countless players due to high consumer and supplier power, low switching costs, and low barriers to entry. The three main players battling it out for remote access to purchased music collections at the end of 2011 are Amazon, Apple and Google, although the winner has yet to be determined.
The Musical Evolution
The music evolution within the past 50 years began with vinyl records, and then transitioned to cassette tapes in the 1980s before cds became the impromptu standard in the 1990s. The beginning of the 20th century saw a poignant shift away from cds to digital music files with the launch of iTunes in 2003. While music transitioned from physical to digital copies, it also shifted from local to mobile. The launch of the Walkman and portable cd player in the 1990s allowed users to listen to music onthe-go, even though they still had to have access to their main collection. Coinciding with the transition to digital, the introduction of MP3 players enabled consumers to leave their music collection in one place but still access it wherever they went. Most recently, Internet access and cloud technology have enabled consumers to stream music remotely and on-the-go. The shift from physical and local collections to digital and mobile collections has also preempted the transition from personal consumption of music toward social and shared usage. As researchers Sease and McDonald noted: “Future media management systems have an opportunity to see beyond the “one collector” blinders, establishing identity management, possibly in the form of traditional user accounts, for various members of a home, allowing simultaneous merging and segmenting of collections, and adding features that would facilitate curatorial and custodial tasks.”1 Media Lifecycle The three major transitions detailed above (physicaldigital; localmobile; personalshared) have affected all portions of the media lifecycle, which includes six key phases: learning, acquiring, listening, sharing, organizing and collecting.
Sease, R. and McDonald, D. W. (2009). Musical Fingerprints: Collaboration Around Home Media Collections. In Proceedings of the ACM 2009 International Conference on Supporting Group Work (GROUP '09). ACM, New York, NY, 331-340.
Learning: Whereas before when consumers typically learned of new music via word-of-mouth, today consumers are more likely to find new music through incidental information acquisition via social networks and online searching and browsing habits. Acquiring: According to Sease and McDonald, people acquire music in order to have immediate and permanent access, to have better control of the ‘programming’, and/or for the joy of collecting a complete set. “Expense largely informs acquisition” where access to cheap or free media resulted in large collections.2 Thus, today’s digital providers are largely battling over price to facilitate this acquisition driver. Moreover, these providers must focus on connecting their software (where music is learned and acquired) with their hardware (where the following media lifestyle stage of listening occurs). According to a 2009 study by Brinegar and Capra, 67% of respondents synced their device in order to acquire new music. Fifteen percent synced to change or delete music, and another 9% synced to acquire new podcasts.3 Thus, only 9% of respondents connected their software with hardware to do something other than acquire music (mostly to charge their battery). Listening: Researchers Bentley, Metcalf and Harboe found that today’s listeners often select music in a “satisficing nature,” where the search for a song ends once an alternative is close enough to the pre-determined aspiration. This is largely due to the immense collection of digital files and inability to thoroughly search the collection.4 Therefore, digital providers must facilitate intuitive search and organizational capabilities to sort, sift and search a music collection. Sharing: Today, sharing music has been found to be extremely common amongst close friends and family. However, sharing music publicly and with those outside of their immediate social circle is more rare. Brinegar and Capra noted that listeners might be unwilling to share their collections and music preferences due to unperceived and unexpected social implications. Moreover, in terms of sharing music across end devices, they found that “less than half of all 184 respondents (41%) indicated that they shared or synchronized all or portions of music collections across multiple computers.” Of those who did, 34% used read/write physical media whereas only 10% used the sharing feature on iTunes. Surprisingly, they also found that “people use external disk drives, writeable optical media (CDs, DVDs), and email attachments for the purposes of music storage and transfer.”5 Both the habit of sharing with others and sharing across end devices is rapidly evolving. Today’s digital providers must enable capabilities to do so, while also providing privacy controls to share only portions of collection across a portion of devices if need be.
Brinegar, J. and Capra, R. (2011). Managing Music Across Multiple Devices and Computers. To appear in Proceedings of the 2011 iConference, February 8-11, Seattle, WA. 4 Bentley, F., Metcalf, C., and Harboe, G. (2006). Personal vs. Commercial Content: The Similarities Between Consumer Use of Photos and Music. In Proceedings of the CHI 2006 Conference. Montreal, Quebec, Canada, 667-676. 5 Brinegar, J. and Capra, R. (2011). Managing Music Across Multiple Devices and Computers. To appear in Proceedings of the 2011 iConference, February 8-11, Seattle, WA.
Organizing: According to Brinegar, consumers tend to organize their digital music collection similar to their physical CD collection. Thus, digital providers provide the capability for users to organize their online collections by song, artist, genre, and other traditional organizational structures. However, more recent technology also provides an additional organizational schema to group similar songs using a complex algorithm seen in services like Pandora, which further enables incidental information acquisition. Collecting: Bentley found that people collect music based more on their personal connection with the media than on evaluations of quality.6 This is in contrast to Apple’s current business model of only allowing its music to be played locally in the highest quality format possible to ensure a flawless experience. On the other hand, in accordance with Bentley’s finding, Google allows users to change the metadata at the song level to write personal notes, as well as share their music and experience with others using Google+. All service providers are now tackling the issue whether music should be collected locally on a consumer’s hard drive or in the cloud for remote access. Another important component of the collection phase is storage, back up, and recovery of music, which is a major competitive advantage for cloud technology providers.
Mobile technology is the driving force behind the increasing demand for remote, on-the-go access of music, both to stream and download. According to Gartner, worldwide mobile connections will reach 5.6 billion in 2011, up 11 percent from 5 billion connections in 2010.7 During the third quarter of 2011, 440.5 million mobile device units were sold worldwide, a 5.6 percent YOY increase. Smartphone devices accessing the Internet made up 26 percent of the quarterly sales.8 Morgan Stanley predicts the number of mobile Internet users to usurp the number of PC Internet users by the middle of 2013 as mobile data usage increases and voice usage decreases.9 Data usage entails access to both mobile Web sites and mobile apps. The two biggest app providers are Apple’s App Store for its iOS platforms and Google’s Android Marketplace for its Android OS platforms. As of November 2011, Apple boasts more than 500,000 active applications in its App Store.10 In comparison, Google boasts a little over 300,000 active applications. However, the number of apps in the Android Market is expected to surpass those in the App store by mid-2012. During the six-month period from August 2010 to February 2011, the Android market saw a 127 percent increase in apps whereas Apple’s App Store only saw a 44 percent increase.11
Bentley, F., Metcalf, C., and Harboe, G. (2006). Personal vs. Commercial Content: The Similarities Between Consumer Use of Photos and Music. In Proceedings of the CHI 2006 Conference. Montreal, Quebec, Canada, 667-676. 7 "Gartner Says Worldwide Mobile Connections Will Reach 5.6 Billion in 2011 as Mobile Data Services Revenue Totals $314.7 Billion." Gartner Inc. 4 Aug. 2011. Web. 23 Nov. 2011. <http://www.gartner.com/it/page.jsp?id=1759714>.
"Gartner Says Sales of Mobile Devices Grew 5.6 Percent in Third Quarter of 2011; Smartphone Sales Increased 42 Percent." Gartner Inc. 15 Nov. 2011. Web. 23 Nov. 2011. <http://www.gartner.com/it/page.jsp?id=1848514>.
"Internet Trends 2010 by Morgan Stanley Research." Slideshare. 7 June 2010. Web. 23 Nov. 2011. <http://www.slideshare.net/CMSummit/msinternet-trends060710final>.
"Apple – IPhone 4S – See Apps and Games from the App Store." Apple. Web. 23 Nov. 2011. <http://www.apple.com/iphone/from-the-appstore/>.
O'Dell, Jolie. "The Android Market Has Published Half a Million Apps | VentureBeat." VentureBeat. 21 Oct. 2011. Web. 23 Nov. 2011. <http://venturebeat.com/2011/10/21/android-apps-half-million/>.
During its fiscal 4th quarter ending on September 24, 2011, Apple sold 17.07 million iPhones (21 percent YOY growth), 11.12 million iPads (166 percent YOY growth), and 6.62 million iPods (27 percent YOY decline – hinting at a potential market saturation).12 In total, as of October 2011, Apple reported 250 million iOS devices sold (including both iPhones and iPads), running a total of 18 billion apps.13 Despite Apple’s strong hardware sales all utilizing iOS, Google’s Android OS currently dominates worldwide smartphone sales with 52.5 percent market share during Q3, 2011, nearly doubling its share from 25.3 percent during Q3, 2010.14 In comparison, iOS had 15 percent market share during Q3, 2011, down from 16.6 percent one-year prior. As of October 2011, Google reported that there were 190 million Android devices in use.15
Online Music Competitive Landscape
The online music space is cluttered and unattractive from a strategic perspective, as shown in a Porter’s five forces analysis on the industry in exhibit 1. There are two distinct business models for music cloud providers: 1) renting access to their music libraries or 2) granting space to store and play personal collections of purchased files. By renting, users pay a service such as Pandora to handle the royalty fees. The downside to this business model is that these middlemen can only play a specific song a certain number of times a day depending on the contract, so users many times cannot play specific tracks on demand. The other service model entails users purchasing music and using a cloud provider to store and play those files remotely. The downside to this model is that end users are limited to the number of tracks in their personal collection rather than the online streaming provider’s collection. Arguably the three most dominant and well-known cloud music providers for purchased collections are Amazon’s Cloud Player, Apple’s iCloud and Google Music. Other significant players for rented access to audio files include online streaming companies Pandora, Rhapsody, Last.fm and Spotify. An overview comparison of the seven prior purchase and rental providers is included in Exhibit 9. Lesser known (but still viable) players in the online music space include Slacker, Jango, Maestro, MOG, Beatport, Bandcamp, EMusic, Zune, Subsonic, mSpot, Grooveshark, Turntable and Rdio, among others.16 Following is a brief overview of the major rental music cloud providers Pandora, Rhapsody, Last.fm and Spotify, in order of launch date. To compare, a brief analysis of the satellite provider SiriusXM is also included.
"Apple Reports Fourth Quarter Results." Apple. 18 Oct. 2011. Web. 23 Nov. 2011. <http://www.apple.com/pr/library/2011/10/18AppleReports-Fourth-Quarter-Results.html>.
O'Brien, Terrence. "Apple: 250 Million IOS Devices Sold, 18 Billion Apps Downloaded." Engadget. 14 Oct. 2011. Web. 23 Nov. 2011. <http://www.engadget.com/2011/10/04/apple-250-million-ios-devices-sold/>.
"Gartner Says Sales of Mobile Devices Grew 5.6 Percent in Third Quarter of 2011; Smartphone Sales Increased 42 Percent." Gartner Inc. 15 Nov. 2011. Web. 23 Nov. 2011. <http://www.gartner.com/it/page.jsp?id=1848514>.
Arthur, Charles. "Mobile Generating Equivalent of $2.5bn a Year, Says Google Chief | Technology | Guardian.co.uk." The Guardian. 14 Oct. 2011. Web. 23 Nov. 2011. <http://www.guardian.co.uk/technology/2011/oct/14/android-google-ad-revenue>.
Gordon, Whitson. "Cloud Music Comparison: What's the Best Service for Streaming Your Library Everywhere?" Lifehacker, Tips and Downloads for Getting Things Done. 15 June 2011. Web. 19 Nov. 2011. <http://lifehacker.com/5812138/cloud-music-comparison-whats-thebest-service-for-streaming-your-library-everywhere>.
Pandora: Pandora Radio was founded in January 2000, and went public on June 15th, 2011. At the time it went public the company had 94 million registered users, $203.34 million in annual revenue, and 800,000 songs in its online music library.17 As of November 19, 2011, its market cap was $2.08 billion, down from the initial $2.6 billion valuation on its IPO date.18 Pandora is available as a free app on all mobile phones and is consistently in the top-five list of app downloads. Pandora used to offer a freemium model up to 40 hours of listening a month with advertisements. If users exceeded the 40 hours they could purchase unlimited streaming for the rest of the month for $0.99. 19 As of September 2011 when Pandora unveiled its latest web player using HTML5 technology, it eliminated the 40-hour cap on its free model, offering listeners unlimited streaming with advertisements.20 Pandora One, the premium service, is $39 per year and provides unlimited streaming with no ads. Rather than playing songs on demand, users pick a song or artist that they like, and Pandora uses a complex algorithm to create a playlist of similar music pulled from their Music Genome Project database that is updated in real-time based on user feedback. Pandora is only available in the U.S. at the time of this writing. Rhapsody: Launched in December of 2001, Rhapsody is only available in the U.S. and costs $10 per month for unlimited access to its 13 million songs via the Web or one of its free mobile apps. As of August 2011, Rhapsody had 800,000 paying customers.21 In October of 2011 Rhapsody signed a deal to acquire Napster’s users (estimated around 300,000 - 400,000) and other assets including brand name, which it will likely phase out. Best Buy purchased Napster in 2008 for $121 million, thus giving them a minority stake in Rhapsody.22 Last.fm: Founded in the U.K. in 2002, Last.fm is an online streaming music service similar to Pandora Radio. It uses a recommendation engine known as “Audioscrobbler” to determine users’ musical tastes from their local files and online streaming habits, which is then used to create musical profiles of users. In May of 2008 the site was acquired by CBS Corp. for $280 million.23 Online streaming within the U.K., U.S. and Germany is free, and others can purchase a subscription for $3 per month. As of March 2009 (which is the latest data the author could find), 30 million people used the service every month, listening from a database of more than 7 million songs.24 Since February 2011, mobile users are required to pay $3 per month to stream music via mobile apps.25
Lynley, Matthew. "Pandora’s IPO Price Now $16, Debuts Tomorrow | VentureBeat." VentureBeat | Tech. People. Money. 14 June 2011. Web. 19 Nov. 2011. <http://venturebeat.com/2011/06/14/pandora-ipo-wednesday/>. 18 P: Summary for Pandora Media, Inc. Common Stoc- Yahoo! Finance." Yahoo! Finance - Business Finance, Stock Market, Quotes, News. Web. 19 Nov. 2011. <http://finance.yahoo.com/q?s=P>. 19 "Pandora Media | CrunchBase Profile." CrunchBase, The Free Tech Company Database. Web. 19 Nov. 2011. <http://www.crunchbase.com/company/pandora>.
Ludwig, Sean. "Pandora Launches Slick HTML5 Site with Free Unlimited Listening | VentureBeat." VentureBeat. 21 Sept. 2011. Web. 25 Nov. 2011. <http://venturebeat.com/2011/09/21/pandora-html5-free-unlimited-listening/>.
Sisario, Ben. "Rhapsody to Acquire Napster in Deal With Best Buy - NYTimes.com." A Guide to the Media Industry - Media Decoder Blog. The New York Times, 3 Oct. 2011. Web. 19 Nov. 2011. <http://mediadecoder.blogs.nytimes.com/2011/10/03/rhapsody-to-acquire-napster-indeal-with-best-buy/>.
Melanson, Donald. "Rhapsody Announces Plans to Acquire Napster." Engadget. 3 Oct. 2011. Web. 19 Nov. 2011. <http://www.engadget.com/2011/10/03/rhapsody-announces-plans-to-acquire-napster/>.
Havenstein, Heather. "CBS Ups Social Networking Ante with Last.fm Acquisition - Computerworld." Computerworld - IT News, Features, Blogs, Tech Reviews, Career Advice. 30 May 2007. Web. 19 Nov. 2011. <http://www.computerworld.com/s/article/9021918/CBS_ups_social_networking_ante_with_Last.fm_acquisition>. 24 Jones, Richard. "Last.fm Radio Announcement." Last.HQ. 24 Mar. 2009. Web. 19 Nov. 2011. <http://blog.last.fm/2009/03/24/lastfm-radioannouncement>.
Spotify: Launched in the fall of 2008, this private Swedish streaming music company is now available in 8 countries, including in the U.S (which launched July 14th, 2011, one month after Pandora IPO’d). It has a tiered pricing model with a freemium version with advertising, a midgrade version with no ads for $4.99 per month, and the premium version with no ads and mobile capability for $9.99 per month.26 As of September 2011, Spotify had 2 million paying customers (10 million total), doubling its user base from 1 million only six months earlier.27 Its collection consists of approximately 15 million songs from all four major labels.28 SiriusXM: On November 12, 2008, satellite music providers Sirius and XM completed a $13 billion merger to form SiriusXM in an equal 50/50 ownership.29 The company provides online radio streaming of its 130 channels via a Web browser or mobile app for both Androids and Apple products. Currently, access to SiriusXM in your car and online is $199 per year. As the beginning of November 2011, SiriusXM had 21.3 million subscribers.30 Following is a detailed competitive analysis on Amazon’s Cloud Drive and Player, Apple’s iCloud, and Google Music.
Amazon Cloud Drive and Player
Amazon secured first mover advantage in the cloud music wars when it launched the Amazon Cloud Drive and Player on March 28th, 2011, six-and-a-half months before Apple and nearly eight months before Google. A strengths, weaknesses, opportunities and threats (SWOT) analysis on Amazon’s music business model is shown in exhibit 6. Uploading Music The service provides 5GB of storage for free, with additional storage priced at $1 per GB per year (see exhibit 2 for tiered pricing model). Users can manually select files to upload through Amazon’s online interface. To upload an entire music collection, users have to install an MP3 uploader tool that runs on Macs and PCs and requires the Adobe Air plugin. Once installed, it will automatically scan your computer and upload a user-specified amount of files to the Cloud Drive.31 However, according to several accounts, the service does not upload file metadata (such
Cheng, Jacqui. "Free Last.fm Service on Mobile Devices Turning into Subscriber-only Feature." Ars Technica. Feb. 2011. Web. 19 Nov. 2011. <http://arstechnica.com/media/news/2011/02/free-lastfm-service-on-mobile-devices-turning-into-subscriber-only-feature.ars>.
"Spotify Premium - Mobile Music - Online Music - Download and Listen - Spotify." A World of Music - Spotify. Web. 19 Nov. 2011. <http://www.spotify.com/us/get-spotify/premium/>.
Van Grove, Jennifer. "Spotify Surpasses 2 Million Paying Subscribers." Mashable: Social Media News and Web Tips. 21 Sept. 2011. Web. 19 Nov. 2011. <http://mashable.com/2011/09/21/spotify-2-million-subscribers/>.
"Spotify | CrunchBase Profile." CrunchBase, The Free Tech Company Database. Web. 19 Nov. 2011. <http://www.crunchbase.com/company/spotify>.
"Sirius XM Radio - SIRIUS and XM to Combine in $13 Billion Merger of Equals." Sirius XM Radio - Investor Overview. 19 Feb. 2007. Web. 19 Nov. 2011. <http://investor.sirius.com/releasedetail.cfm?releaseid=230306>.
Sisario, Ben. "Sirius XM Profit Grows, but Subscription Growth Fails to Meet Expectations - NYTimes.com." A Guide to the Media Industry Media Decoder Blog. The New York Times, 1 Nov. 2011. Web. 19 Nov. 2011. <http://mediadecoder.blogs.nytimes.com/2011/11/01/sirius-xmprofits-grow-but-subscription-growth-fails-to-meet-expectations/>. 31 Montgomery, Kelly. "Apple ICloud vs. Google Music vs. Amazon Cloud." ABC 12. 26 June 2011. Web. 19 Nov. 2011. <http://www.abc12.com/story/14957601/apple-icloud-vs-google-music-vs-amazon-cloud>.
as star rating and play count), a key disadvantage.32 However, another account noted that it does recognize iTunes playlist data.33 Buying Music U.S. and U.K. users can purchase 16 million songs in the company’s storefront Amazon MP3. The songs are competitively priced and Amazon many times offers a $5 credit post-purchase to incentivize repeat sales. Moreover, all four of the major labels are included in Amazon MP3. All Amazon music purchases do not count toward the 5GB limit. To incentivize first-time buyers, Amazon initially upgraded users to 20GB of storage once they purchased an album.34 More recently, in an apparent strategic move against Apple and Google, Amazon is giving users unlimited free music storage space for “eligible formats” (MP3 (.mp3) and AAC (.m4a, iTunes non-DRM files) format less than 100 MB in size) for all paid plans.35 Playing Music Music can be streamed using the Cloud Player within one of the main Web browsers to any PC or Mac. A free Amazon Cloud Player app can be installed on any Android device to access files and the Amazon storefront.36 Until recently, there was a $1.99 unofficial Cloud Player iOS app available for Apple devices called aMusic, which was developed by Interactive Innovative Solutions. However, the app was temporarily removed on November 1st, 2011, until paperwork is completed to allow third-party apps to access Amazon’s music cloud infrastructure.37 Thus, in the meantime iPhone and iPad customers will have to download files purchased from Amazon MP3 and move them into their iTunes app in order to play the music. Downloading Music To manually download files, users need to have Amazon's Adobe Air-based MP3 Downloader app. Otherwise users can set up automatic downloads (specific per device) via the Cloud Player’s settings menu.38 Downloads are limited to eight devices.39
Apple released the iCloud on October 12th, 2011, and saw more than 20 million users within a week of launch.40 A SWOT analysis on Apple’s music business model is shown in exhibit 7.
Lentz, Michelle. "Review: Google Music Beta." Bub.blicio.us | Covering the Social Economy Driving the New Web. 23 May 2011. Web. 19 Nov. 2011. <http://bub.blicio.us/review-google-music-beta/>. 33 Bell, Donald. "Amazon Cloud Drive and Cloud Player (review)." CNET. 29 Mar. 2011. Web. 19 Nov. 2011. <http://download.cnet.com/83012007_4-20048416-12.html>. 34 Musil, Steven. "Amazon Launches Digital Music Locker." CNET. 28 Mar. 2011. Web. 19 Nov. 2011. <http://news.cnet.com/8301-1023_320048160-93.html>. 35 "Get Started with the Amazon MP3 Store, Cloud Player & Cloud Drive." Amazon. Web. 19 Nov. 2011. <http://www.amazon.com/b/? ie=UTF8&node=2658409011&tag=googhydr-20&hvadid=10051401225&ref=pd_sl_6fao23lz18_e>. 36 Musil, Steven. "Amazon Launches Digital Music Locker." CNET. 28 Mar. 2011. Web. 19 Nov. 2011. <http://news.cnet.com/8301-1023_320048160-93.html>. 37 Warren, Christina. "Why Amazon Had Cloud Music App Pulled from the App Store." Mashable: Social Media News and Web Tips. 1 Nov. 2011. Web. 19 Nov. 2011. <http://mashable.com/2011/11/01/amazon-removed-amusic-app-store/>. 38 Bell, Donald. "Amazon Cloud Drive and Cloud Player (review)." CNET. 29 Mar. 2011. Web. 19 Nov. 2011. <http://download.cnet.com/83012007_4-20048416-12.html>. 39 Muchmore, Michael. "7 Things You Need to Know About Google Music." PC Magazine. 18 Nov. 2011. Web. 19 Nov. 2011. <http://www.pcmag.com/article2/0,2817,2396598,00.asp>.
Uploading Music Rather than requiring users to upload every individually owned file like Amazon’s Cloud Drive, iCloud automatically matches up to 25,000 songs of eligible iTunes-purchased music to the cloud storage. Eligible music entails files purchased after 2008 that do not have digital rights management (DRM) encryption (unless the computer using iCloud is authorized to access that file). Users can then manually upload non-iTunes music up to their 5 GB storage limit (separate from the 25K song limit), or purchase a plan from its tiered pricing structure, shown in exhibit 3. A month after unveiling iCloud, Apple released iTunes Match, the $24.99-per-year service to find a match of non-iTunes-purchased music in the cloud.41 However, a file larger than 200 MB will not be uploaded, neither will music originally encoded as AAC or MP3 at less than 96 Kbps.42 System requirements are Lion OS X 10.7.2 for Mac users, Windows Vista or 7 for PC users, and iOS 5 for Apple mobile users. According to exhibit 4, 81.4% of Mac users will have to buy the $29.99 OS upgrade in order to utilize iCloud. Furthermore, according to exhibit 5, 42.6% of PC users will have to purchase the $79.95 Windows 7 upgrade. Upgrades to iOS5 for mobile users is free via iTunes. Buying Music Users can buy music as they did before using iTunes, which boasts more than 20 million tracks from all four major labels. Once purchased, it will automatically be matched into their cloud storage as well as available locally. Playing Music Music cannot be streamed via the Web, which is a key disadvantage to iCloud. Rather, users simply have access to their music files on a variety of devices in order to download the files to play locally. Downloading Music Files from a music collection can be downloaded on up to 10 Apple devices, five of which can be computers. All compatible devices must have the iTunes app installed.43 Tracks are downloaded over Wi-Fi or 3G at 256 Kbps, even if the original files were of lower quality.44
Google Music launched to U.S. residents on November 16th, 2011, six months after the beta version was released at the 2011 Google I/O conference and 37 days after Apple launched its
Reisinger, Don. "Big Mo: In One Week, Apple ICloud Hits 20M Users; 25M Use IOS 5." CNET. 17 Oct. 2011. Web. 19 Nov. 2011. <http://news.cnet.com/8301-13506_3-20121323-17/big-mo-in-one-week-apple-icloud-hits-20m-users-25m-use-ios-5/>. 41 Lowensohn, Josh. "ITunes Match Arrives, as Does a New Apple Board Member | Apple Talk - CNET News." CNET. 19 Nov. 2011. Web. 19 Nov. 2011. <http://news.cnet.com/8301-27076_3-57328063-248/itunes-match-arrives-as-does-a-new-apple-board-member/>. 42 Fleishman, Glenn. "ITunes Match Stores Songs in ICloud." The Seattle Times. 18 Nov. 2011. Web. 19 Nov. 2011. <http://seattletimes.nwsource.com/html/businesstechnology/2016783592_ptmacc19.html>. 43 Gilbert, Jason. "Google Music vs. ITunes Match: First Round Knockout For ... Google Music." The Huffington Post. 17 Nov. 2011. Web. 19 Nov. 2011. <http://www.huffingtonpost.com/2011/11/17/google-music-itunes-match_n_1099423.html>. 44 Ionescu, Daniel. "Apple's ICloud Supports Streaming of Your ITunes Library to IPhone, Other Devices | PCWorld." PCWorld. 30 Aug. 2011. Web. 19 Nov. 2011. <http://www.pcworld.com/article/239113/apples_icloud_supports_streaming_of_your_itunes_library_to_iphone_other_devices.html>.
iCloud.45 International access to Google Music is expected in the near future. A SWOT analysis on Google’s music business model is shown in exhibit 8. Uploading Music Users have to install a Music Manager tool to upload files. System requirements are Mac OS X 10.5 and above or Windows XP and above (thus immediately accessible to roughly 95% of Mac users and more than 98% of PC users, according to exhibits 4 and 5). Users can upload up to 20,000 songs in their personal collection to Google’s cloud storage for free, enabling them to listen to the music from any web browser or compatible Android mobile device. A pricing model for users uploading more than 20,000 songs has not been released at the time of this writing. Google Music does not distinguish between music purchased on iTunes, Amazon MP3 or elsewhere in its song limit count. Google Music maintains all metadata (such as song ratings and play counts) and playlist data from iTunes, an advantage over Amazon’s Cloud Player. Moreover, the service caches recently played songs and other user-designated tracks on mobile devices in order to optimize streaming.46 Buying Music Users can purchase additional tracks for Google Music through the Android Marketplace, a separate site, which is available via the Web and pre-loaded on devices running Android 2.2 and above. A free Android app is available for older versions, and although access to Android Marketplace is not available in Apple’s app store, the Web site is viewable and functional on iOS devices. The storefront currently offers only 13 million tracks (compared to Amazon’s 16 million and Apple’s 20 million) from artists on three of the four main record labels: Universal Music Group, Sony Music Entertainment and EMI. To date, Google does not have a contract in place with Warner Music Group, the third-largest major label.47 Recall that Amazon and Apple both contain music from all four labels. Google also has contracts with the global independent rights agency Merlin and more than 1,000 prominent independent labels and distributors.48 As a direct competitor to dwindling MySpace, Google provides capabilities for independent artists to set up their own Web pages for a $25 fee, where they can then price their music as they wish and Google receives 30% of the monthly revenue.49 Music in the Android Marketplace is competitively priced, but many times still higher than the same track in Amazon MP3 and/or iTunes. To celebrate the launch of Google Music, they are
Boutin, Paul. "Amazon's and Google's Cloud Services Compared - NYTimes.com." Electronics and Gadgets - Gadgetwise Blog. The New York Times, 6 June 2011. Web. 19 Nov. 2011. <http://gadgetwise.blogs.nytimes.com/2011/06/06/amazons-and-googles-cloud-servicescompared/>. 47 Sisario, Ben. "Google Opens a Digital Music Store - NYTimes.com." A Guide to the Media Industry - Media Decoder Blog. The New York Times, 16 Nov. 2011. Web. 19 Nov. 2011. <http://mediadecoder.blogs.nytimes.com/2011/11/16/google-opens-a-digital-music-store/? ref=technology>. 48 "Google Music Is Open for Business." Official Google Blog. 16 Nov. 2011. Web. 19 Nov. 2011. <http://googleblog.blogspot.com/2011/11/google-music-is-open-for-business.html>. 49 "Google Music for Artists." Google. Web. 19 Nov. 2011. <http://music.google.com/artists/>.
providing free access to a vast number of tracks from lesser-known artists and exclusive access to never-before-released songs by artists, such as the Rolling Stones.50 Google Music syncs with its social networking service Google+, where customers can share a recently purchased track with those in their circles (those outside their circles can only preview the track, though).51 Playing Music Similar to the Amazon iOS app, Interactive Innovative Solutions developed a $1.99 app called gMusic for users to access their music on iOS 4.01 or later devices.52 Unlike Amazon, the Google app is still available in the Apple App Store. Users can also access and stream their music from the Web interface or on their Android devices. While Google Music was in beta, listeners on average streamed music 2.5 hours per day.53 Downloading Music Users can only download music purchased from the Android marketplace (whereas iTunes Match and Amazon Cloud Player let users download stored music to any computer or compatible mobile device.)54 Downloads are limited to eight devices.55
By examining the current leader (determined by the author and is subject to change by person and over time) in each of the six media lifecycle phases, it is clear that there is no current winner in the music cloud war: Learning: Google Despite having the least amount of songs and not having Warner Music Group signed on, Google still has the best infrastructure to browse and discover new and particularly lesser-known artists through browse and search capabilities and artist Web pages. Moreover, the song list quantity and quality will undoubtedly improve in the near future. Acquiring: Amazon Amazon is known for the best deals, which is an important factor of the acquisition phase. The site homepage boasts albums for under $5 and songs for $.49 rather than the recommendation homepage of Apple and the browsing homepage of Google. Also, Google allows artists to set their own prices, which will likely be pricier than the $1.29 industry standard.
"Google Music Is Open for Business." Official Google Blog. 16 Nov. 2011. Web. 19 Nov. 2011. <http://googleblog.blogspot.com/2011/11/google-music-is-open-for-business.html>. 51 Kincaid, Jason. "Google Music Opens For Everyone In The US, Features Full-Song Sharing To Google+." TechCrunch. 16 Nov. 2011. Web. 19 Nov. 2011. <http://techcrunch.com/2011/11/16/google-music-opening-for-everyone-features-full-song-sharing-to-google/>. 52 "GMusic: A Native Google Music Player." Apple App Store. Web. 19 Nov. 2011. <http://itunes.apple.com/us/app/gmusic-a-native-googlemusic/id472342018?mt=8>. 53 Nakashima, Ryan. "Google Opens Music Store to US, Challenge to Apple." The Associated Press. 17 Nov. 2011. Web. 23 Nov. 2011. <http://www.google.com/hostednews/ap/article/ALeqM5h0ESYl8dYsJ1OvvDRB51kXMMXZIQ?docId=528b8e8bdcf647f494fa40bc16c7a5f2>.
Muchmore, Michael. "7 Things You Need to Know About Google Music." PC Magazine. 18 Nov. 2011. Web. 19 Nov. 2011. <http://www.pcmag.com/article2/0,2817,2396598,00.asp>. 55 Ibid.
Listening: Amazon Amazon has the upper hand for listening since it is not solely linked to either the Apple iOS or Google Android platforms. Rather, it will stream to all platforms, PC and mobile. It appears as though the Amazon Cloud Player app will be reinstated in the Apple App Store in the near future, enabling online streaming access to Apple users rather than the download-only capabilities of Apple. Moreover, few listeners can tell the difference between file formats, so Apple’s higher quality 256 Kbps versions are not a clear advantage. Sharing: Google By syncing Google Music to Google+, listeners automatically have the ability to share their listening experience with more than 50 million users. Apple’s closed-wall strategy, on the other hand, makes it extremely difficult to share music. Moreover, although Amazon allows users to share what music they are listening to via their Facebook and Twitter networks, they are unable to share access to the music, which gives Google competitive advantage. Organizing: Apple Apple still has the upper hand in terms of music organization, having created the initial organizational principles of stars, playlists, and metadata in iTunes. Amazon, conversely, does not include all of this pertinent information after upload. Collecting: Apple Since the majority of users already have a substantial iTunes collection, Apple’s iCloud will have the superior collection capabilities for the time being. That being said, once users take the time to upload their music from cds and outside of iTunes, Apple will no longer have the competitive advantage since Google provides the most non-iTunes upload space.
Exhibit 1: Online Music Industry Five Forces Analysis Bargaining Power of Suppliers: HIGH - Music labels have significant power in terms of granting or restricting access to their music, as seen by Warner Music Group restricting Google access. The success of any one music provider is solely dependent on the number of songs it can provide its consumers. If the desired song is not available on one site, the consumer will easily look elsewhere. Bargaining Power of Customers: HIGH - There are few switching costs preventing customers from using one service over another. Providers are likely to listen to consumers’ wants so as to not lose them as a customer. For example, I assume Amazon will integrate playlist metadata into a future version since that it a deterrent to its service in comparison to Apple and Google. Threat of New Entrants: HIGH - The competitive landscape is already crowded but any incomer can start a streaming music and/or music storage site once they have secured the rights to do so. The barriers to entry are low. Also, existing cloud storage companies such as Dropbox can easily become a direct competitor by remotely storing music files. Threat of Substitute Products: HIGH - Due to low switching costs and competitive advantages from one product to another, some consumers may use more than one service and substitute needs depending on vendor capabilities. For instance, a user may upload all of his iTunes music to the free iCloud storage, all of his Amazon MP3 music to the free Cloud Player storage, and his ripped music to the free Google Cloud storage to prevent from having to pay any one provider. Or, he may choose to use a rental service such as Pandora where he only rents rights to hear a song rather than pay to own. Competitive Rivalry within the Industry: HIGH - Rivalry is intense, as seen by Amazon’s recent offer that users get unlimited music storage with any purchased plan. This is not ideal for Amazon, but considering the immense free access to its rivals’ cloud storage, Amazon was forced to offer this incentive.
Tracy Clark Exhibit 2: Amazon’s Pricing Table56 Additional Storage 20 GB 50 GB 100 GB 200 GB 500 GB 1,000 GB
Price $20/year (unlimited music storage) $50/year (unlimited music storage) $100/year (unlimited music storage) $200/year (unlimited music storage) $500/year (unlimited music storage) $1,000/year (unlimited music storage)
Exhibit 3: Apple’s Pricing Table57 Additional Storage 10 GB 20 GB 50 GB Price $20/year (15GB total iCloud storage) $40/year (25GB total iCloud storage) $100/year (55GB total iCloud storage)
Exhibit 4: Apple OS Version Usage (August - October, 2011)58 Operating System Version Lion OS X 10.7 Snow Leopard OS X 10.6 Leopard OS X 10.5 Tiger OS X 10.4 Other/Undetected Percentage of Users 18.6% 56.1% 20.1% 4.8% 0.4%
56 57 58
"Amazon Cloud Drive." Amazon. Web. 19 Nov. 2011. <https://www.amazon.com/clouddrive/>.
"ICloud - Your Content. On All Your Devices." Apple. Web. 19 Nov. 2011. <http://www.apple.com/icloud/>.
"Operating Systems Market Share / Usage." StatOwl.com - Statistical Analysis and Market Research of Internet Usage Trends. Web. 19 Nov. 2011. <http://www.statowl.com/operating_system_market_share_by_os_version.php?1=1>.
Exhibit 5: PC OS Version Usage (August - October, 2011)59 Operating System Version Windows 7 Windows Vista Windows XP Windows Server 2003 Other/Undetected Percentage of Users 40.4% 17.0% 41.2% 1.1% 0.3%
Exhibit 6: Amazon Cloud Player SWOT Analysis Strengths: ● First mover advantage. ● Seamless integration with Kindle Fire and Amazon storefront. ● WMG songs available. ● Known for lowest prices and best deals. Weaknesses: ● Can’t play older iTunes songs or “lossless” high-def audio. ● Original file format maintained after upload rather than up-converting to higher-quality format. ● Requires Adobe AIR software and plugin to upload/download files. ● Has to be manually pointed to the iTunes collection upon initial scan.60 ● Doesn’t maintain iTunes file metadata. ● No metadata editing capabilities at the song level.61 ● Amazon MP3 storefront only available to US and UK users.62 ● Users can only preview 30 seconds of a song versus 90 seconds for iTunes and Google. Opportunities: ● Serve as the middleman providing seamless service between both Apple and Android devices and pledging sole allegiance to neither. ● Improve technology on the SaaS upload/download tool to remove reliance on dwindling Flash technology within the Amazon MP3 Uploader application. Apple and Google both require a desktop app for uploads, so this could be a key differentiator for Amazon.
http://www.statowl.com/operating_system_market_share_by_os_version.php? 1=1&timeframe=last_6&interval=month&chart_id=4&fltr_br=&fltr_os=&fltr_se=&fltr_cn=&limit%5B%5D=windows&timeframe=last_3 60 Lentz, Michelle. "Review: Google Music Beta." Bub.blicio.us | Covering the Social Economy Driving the New Web. 23 May 2011. Web. 19 Nov. 2011. <http://bub.blicio.us/review-google-music-beta/>. 61 Ibid.
Henry, Alan. "Google Music vs Amazon MP3 vs ITunes: Which Online Music Store Is the Best for You?" Gizmodo, the Gadget Guide. 18 Nov. 2011. Web. 19 Nov. 2011. <http://gizmodo.com/5860885/google-music-vs-amazon-mp3-vs-itunes-which-online-music-store-is-the-bestfor-you>.
Threats: ● Google and Apple’s 20K and 205K initial song upload (respectively) freemium version cuts into Amazon’s bargaining power forcing users to buy an annual subscription in order to have unlimited music storage. ● If the Apple app doesn’t come back Amazon will lose loyal Apple users. Exhibit 7: Apple’s iCloud SWOT Analysis Strengths: ● All files played at high-quality 256 Kbps, regardless of original format. ● Syncs most files to those stored in the cloud, removing the need to upload files and eliminating redundancy in the back-end storage. Allows personal collections to be sync’d in minutes rather than hours or days. ● Able to play older iTunes tracks wrapped in Apple’s digital rights management software and the bigger “lossless” high-definition audio downloads. ● Maintains iTunes file metadata. ● Warner Music Group songs are available for purchase. ● Seamless integration with iTunes, which has the most available songs at 20 million. Weaknesses: ● No streaming capabilities over the Web. ● All end devices must be Apple products with iTunes app installed. ● Downloads limited to 10 Apple devices. ● No web interface for ecommmerce; iTunes remains a software download. ● No social interaction around purchasing/listening habits. ● iCloud only works with latest Mac and PC operating systems, requiring majority of users to purchase OS upgrades. Opportunities: ● Make a SaaS version of iTunes to be accessible over the web to enable streaming and purchasing access anytime, anywhere. ● Acquire Spotify, Pandora or another online streaming company in order to provide the streaming capabilities in addition to the current download-only option of iCloud. Threats: ● Users move away from locally playing files and prefer streaming, thus forcing them to use either Amazon or Google. ● Amazon and Google apps in the Apple store enable users to stream competitor’s music on Apple devices thus lowering the competitive advantage of Apple’s closed-wall business model. ● Usage on only Apple products will prevent mixed households (PC and Mac; Android and iOS) from using iCloud. ● Music may become a social experience, thus moving consumers to Google’s infrastructure since Apple only has the under-used Ping network.
Exhibit 8: Google Music’s SWOT Analysis Strengths: ● Gives users the most free storage space of all songs regardless of where they purchased/acquired it (20k songs vs 5GB; roughly 20x more). ● Maintains iTunes file metadata. ● Metadata editing capabilities at the song level. ● Seamless integration with Android devices. Weaknesses: ● Can’t play older iTunes songs or “lossless” high-def audio. ● Original file format maintained after upload rather than up-converting to higher quality. ● Warner Music Group songs aren’t available for purchase. ● Android Marketplace only currently available to US users. ● Fewest amount of songs available in online store. Opportunities: ● Integrating the artist hub that at one time made MySpace successful with the social sharing hype of Google+ will create a social music hub around Google products, increasing the switching cost. ● Enable users to download all music, not just tracks purchased from Google, which is a current weakness in comparison to Amazon. Threats: ● If Warner Music doesn’t sign, Google may lose customers to Amazon and Apple. ● If Google+ loses fanfare like many of its other products, Google will lose the social sharing advantage, which is one of its main competitive advantages.
Tracy Clark Exhibit 9: Comparison Matrix Amazon (Purchased collections) Apple (Purchased collections) Google (Purchased collections) Pandora (Rented collections) Price 5GB free; 20GB/ $20/yr; 50GB/ $50/yr, etc.
Availability U.S. and U.K. to purchase
Number of Songs 16 million songs from all four major labels 20 million songs from all four major labels 13 million songs from three of the four major labels 800,000 songs as of 6/15/2011
5GB free; Cloud availability 25k free for iTunes “varies by purchases; 15GB/ country,” no further $20/yr; 25G/$40/yr, information given etc. at time of writing. 20,000 songs free; U.S. only unknown price over 20k Freemium with no hourly cap/month; $39/year unlimited U.S. only
Compatibility PC/Mac and Android devices, currently no iOS Mac Lion OS+; Windows Vista or 7+; all iOS; no Android Mac Leopard+; Windows XP+; Android, iOS
All recent web browsers; apps for most all mobile platforms* Rhapsody $10/month U.S. only 13 million songs All recent web (Rented unlimited browsers; apps collections) for all mobile platforms* Last.fm Free unlimited for U.S./U.K./Germany 7 million songs as All recent web (Rented US/UK/Germany; for mobile; of March, 2009 browsers; apps collections) $3/month others; Worldwide for PC for all mobile $3/month mobile platforms* Spotify Freemium with no 8 countries 15 million songs All recent web (Rented hourly cap/month; including U.S. from all four browsers; apps collections) $4.99/month; major labels for all mobile $9.99/month platforms* * Each service has specific and unique requirements for Web and mobile compatibility
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