Among many other things, Google Inc (NASDAQ:GOOG) just unveiled a new music streaming service at its I/O developer conference last week, dubbed Play Music All Access. Streaming services, known in the industry as access models, are the next big thing. Even though they’ve been around in some form or fashion for years, most notably starting with Pandora Media Inc (NYSE:P), they’ve soared in popularity in recent years alongside mobile adoption.
Google Inc (NASDAQ:GOOG)’s announcement is notable primarily because the search giant is front-running Apple Inc. (NASDAQ:AAPL), a domineering force in the music industry. Ever since the iPod and iTunes were launched, Apple Inc. (NASDAQ:AAPL) has preserved a stranglehold on digital music sales while maintaining long-standing relationships with all the major record labels.
Yet The Verge reports that Apple Inc. (NASDAQ:AAPL)’s own rumored iRadio service is still up in the air, even as its own Worldwide Developers Conference, or WWDC, is quickly approaching next month. In fact, there’s even a risk that the Mac maker’s streaming offering may not launch in time if the company can’t ink the necessary licensing deals.
Google’s pre-emptive strike is also notable because record labels tend to like Apple more than they do Google Inc (NASDAQ:GOOG), because Apple Inc. (NASDAQ:AAPL) has expressed more respect toward music content. While Google Inc (NASDAQ:GOOG) and Amazon.com, Inc. (NASDAQ:AMZN) initially launched cloud-storage music lockers without the blessings of the labels, which they weren’t all too happy about, Apple waited to ink the appropriate deals first before iTunes Match was unveiled. That earned it brownie points in the industry.
There’s a key reason for the holdup, though. Google Inc (NASDAQ:GOOG)’s All Access service resembles many other available services, such as Pandora Media Inc (NYSE:P) and Spotify, which makes negotiations easier, since record labels already have an idea of what they want. The terms are mostly already established and just need to be tweaked a little here and there.
In contrast, Apple Inc. (NASDAQ:AAPL) is looking to do something very different and is venturing into uncharted licensing territory with a “hybrid” Web and radio service. The Mac maker’s offering is expected to borrow some traits from Pandora but also offer various on-demand capabilities. Negotiating these terms inevitably takes more time, according to The Verge’s well-placed sources.
The last thing the industry wants is another Pandora Media Inc (NYSE:P), since the first mover pays far less than other services. National Music Publishers Association President David Israelite was quoted as saying, “We can not repeat the disaster that was Pandora, where songwriters were asked to take a tiny fraction of the revenue.”
This is a characteristic Apple Inc. (NASDAQ:AAPL) strategy. When it’s not first, it wants to make sure that it’s the most innovative and differentiated, even if that means it’s currently scrambling to catch up with Google Inc (NASDAQ:GOOG).
The article How Apple Is Scrambling to Catch Up With Google originally appeared on Fool.com and is written by Evan Niu, CFA.
Fool contributor Evan Niu, CFA, owns shares of Apple. The Motley Fool recommends and owns shares of Amazon.com, Apple, and Google.
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