Google's entertainment strategy is in disarray
Google can't seem to get the hang of selling music and movies over the Internet--a goal that has similarly befuddled Microsoft, AOL, Yahoo, and others.
Google TV was dead on arrival. YouTube's video-rental service is at best an also-ran, and that service also faces a possible exodus of major record labels to rival Facebook sometime next year. Google Music no longer exists as a standalone service. Last week, the search company folded the three-month-old music store into the newly revamped Android Market.
Google's misfires illustrate just how hard it is to become a major media player. In Web search, Google is the force to be reckoned with, but otherwise it is just one of many Web companies scrambling to cut deals with movie studios and music labels. The company's goals are clear: It wants Android, its widely adopted operating system for handhelds, to become the premiere force in mobile. Google has also sought to offer entertainment on par with Apple's iTunes, which has generated billions from the sales of music and movies.
The reasons that Google has struggled to make up ground on Apple are varied and include increased competition among those selling movies and music online. But some of Google's partners say that a key factor in the company's entertainment offerings lagging behind Apple's may have something to do with internal competition between the YouTube and Android units.
Three weeks ago, shortly before Google pulled the plug on Google Music as a standalone service, music industry insiders told CNET that the service had failed to meet sales expectations. Multiple sources at the record labels said then that Google lacked a cohesive approach to music. According to them, there was one strategy for YouTube and one for Google Music and sometimes they appeared to be at odds.
The same sources said that not only did this cause confusion during negotiations but some at the labels wondered whether internal rivalries were the reason Google Music hadn't been linked to YouTube--what should have been a no-brainer considering YouTube's significance to music fans. Two years ago, when Google execs pitched the idea of Google Music to the labels, they said such a pairing would happen.
As for movies, turns out Android Market struggled to sell those as well. The store offers movie rentals from such studios as Lionsgate, Warner Bros., Sony Pictures and Disney. Executives from two of the studios that distribute through Android Market compared the store's sales to other Web retailers and called Google's revenue "minuscule" and "insignificant."
Here again, one of the studio sources who spoke with CNET described a competitive environment between the Android and YouTube teams. The source said some execs working with Robert Kyncl, vice president of global content, were critical of their company's overall content strategy and said it was too "fragmented."
Google downplayed the notion that internal forces within the company were competing against each other.
"In a company like Google, there are multiple touch points with partners and our approach varies," the spokeswoman said in a statement. "This means that sometimes we act independently and sometimes jointly, but in all cases we coordinate between product teams."
Google can still point to the success of YouTube, the dominant player in user-generated video and one of the most popular entertainment destinations on the Web.
YouTube's music videos, which are offered free to the public, have helped turn the site into a favorite music-discovery tool. But even here, Google faces a potential crisis.
Executives from Vevo, the service created by three of the four major record labels and the company that controls most of the popular YouTube music clips, are threatening to jump to Facebook next year when the deal with YouTube expires.
When I asked Google to name the person who made the decisions on content, I was told that Andy Rubin, the man who oversees Android, and Kyncl, the YouTube content chief, both made decisions. Maybe for Google to flourish it needs a content czar, or at the very least for those guys to make nice.