Google (NASDAQ:GOOG) just keeps on moving beyond its search-engine roots. According to a report in Bloomberg, the company is planning a music-streaming service that will take on Spotify. In fact, Google is already talking to the major recording labels to license content.
Over the years, Google has certainly been aggressive in trying new things. In some cases, the results have been spot-on, as with its Android mobile operating system, YouTube, AdMob (mobile advertising) and Chrome. But there have also been notable flops like Dodgeball (a mobile location service), Google Answers, Google Video and Google Buzz (a social network). But hey, failure is an inevitable part of innovation.
Plus, digital-music king Apple (NASDAQ:AAPL) is another wildcard. Last September, there were rumors that the company was talking to the recording labels to launch a music-streaming service as well. It would be different from the iTunes platform since the service would be operated from the iCloud. Plus, the 400+ million iTunes user base would be an enormous point of leverage.
Still, Google has its own trick up its sleeve: its YouTube franchise. The video site is by far the largest player in the game, with over 4 billion hours watched per month … and music videos are popular fare. Consider that Psy’s “Gangnam Style” has been viewed over 1.3 billion times since being released seven months ago! Plus, the video has generated over $8 million in ad revenues already. Such reach could make for nice synergies and could be enough to help Google take significant market share in the music field.
That’s good news, as the service could be a nice money-maker. Last year, Spotify generated about $500 million in revenues, according to Techcrunch.
Android will be a nice driver for a music-streaming service, too, as it has 500 million activations and is currently averaging about 1.3 million per day. Looking at things the other way, a music-streaming service would also be a good edition to the Google repertoire, as the company has some of the most popular iOS apps already. Music is the kind of engaging experience that is ideal for mobile.
Keep your eye out for more details. For now, all we know is that Google is shooting for a third-quarter launch.
Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of “How to Create the Next Facebook” and “High-Profit IPO Strategies: Finding Breakout IPOs for Investors and Traders.”Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.