We had heard last December that Google was ready to write huge checks to the record labels to get its music service off the ground, but we had no idea exactly how big.But a story in Businessweek has the answer: more than $100 million.
That’s according to two anonymous label execs.
If true, that makes the cost of entry a real barrier to smaller music startups that are currently in similar areas like Spotify (subscriptions) and Pandora (online radio). Only big companies like Apple, Google, Amazon, and Microsoft could afford those kind of up-front fees or guarantees.
$100 million is also a significant number for the labels: according to the RIAA, total digital U.S. revenue last year was $2.1 billion. But only about $500 million of that revenue came from mobile services like that which Google is building, and only $200 million from subscription services.
Reports from Billboard and other sources say that talks broke down because some labels demanded that Google do more to eliminate pirated music sites from its search results. Google couldn’t agree to compromise its crown jewel, search, so instead it launched with an imperfect service.
Businessweek also reiterated earlier reports that Apple is close to launching a music service — which may be called iCloud — will let customers mirror their iTunes libraries on Apple’s servers, then stream songs to any device. This would save users the hassle of uploading songs manually to the cloud first, as they have to do with Google Music and Amazon’s Cloud Drive.
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