Google, two labels spar on cloud music fees

Google licenses cloud rights from two labels as it tries to offer similar scan-and-match feature as Apple and Amazon. But some at the labels aren't buying into Google's plan to eliminate $25 annual fee.

The facade of the trendy Los Angeles art gallery where Google Music, now part of Google Play, was launched last fall. Greg Sandoval/CNET

As it builds out the entertainment offering for the Android operating system, Google is getting closer to obtaining the rights to offer a scan-and-match feature similar to those offered by Apple and Amazon, sources tell CNET.

Google already offers a cloud music service, but it's unlicensed by the major music-recording companies , and thus legally prevented from offering all the functionality now offered by iTunes and Amazon Cloud Player.

But that could change soon. Multiple music industry sources say that Google has signed licensing deals for its cloud music service with Universal Music Group and Sony Music Entertainment. EMI Music and Warner Music Group are still in negotiations with managers at Google Play, the service that oversees Android's entertainment offerings, including music. A Google spokeswoman declined to comment.

Insiders say one of the sticking points in the talks is that some at the two unsigned labels don't see a viable business model with Google's plan for scan and match.

Scan and match is the term used to describe a process whereby a user's music can be stored on the computer servers of a host service. The service can then stream songs over the Internet to the user's choice of Web-connected music players. The one deciding benefit of scan and match is that it saves the user from the time-consuming process of uploading each individual track to a host's servers.

Google's plan to offer the feature free would certainly make it more attractive than competitors. Apple and Amazon both require a $25 annual fee for their versions of the feature. Sources say most decision makers at the big labels are fine with Google offering the service for free, but they don't have any intention of making the music free to Google. Apple and Amazon paid for the rights to offer scan and match and Google must too, say the sources. So, the parties are stuck on price.

Amazon launched a cloud music service early last year, making the retailer the first among rivals to do so. Amazon, however, only obtained licenses to offer scan and match two months ago. Apple's iTunes launched its scan-and-match feature late last year.

The companies that offer scan and match can tell users that they don't have to worry about storing their music libraries on their local hard drives. They don't have to fret about losing tunes to a hard-drive meltdown or about moving song files to different devices.

It's still unclear whether this is an effective pitch to consumers or whether these features generate much revenue yet. The benefit for Apple, Amazon, and Google is likely derived by offering users a better experience and that could help prevent them from jumping to a competitor.

 

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