This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Google Music Skips a Beat

NEW YORK ( TheStreet) -- Google's (GOOG - Get Report) announcement of its music streaming service, Google Play Music All Access, had much fanfare going into it. After the announcement, it seems Google dropped the ball with this.

At its I/O developer conference, Google's Chris Yerga unveiled the subscription service to take on the likes of Spotify, Rdio and to a lesser extent, Pandora Media (P - Get Report).

By pricing the service at $9.99 per month and not having an ad-supported model, Spotify, Pandora and others have little to fear. The ad-supported model has allowed Spotify to grow to over 24 million users, with over 6 million of those paying for the service. Yes, Google's "Listen Now" feature, which can suggest music to you based on your history, and allows you to combine your purchased music with the radio feed, is nice. But the short-sightedness to attack Spotify, Pandora and others where Google knows best (targeted ads), seems like a curious decision, and perhaps a mistake.

Google shares were higher in Thursday trading, up 0.68% to $922.10.

Piper Jaffray analyst James Marsh notes that the subscription is more limited than the ad-supported base, so it seems as if Google is limiting itself in its approach to a streaming service. "[T]he subscription market is a more limited market, with roughly 20% of radio listeners willing to pay (Pandora's target market is really those they prefer to listen to ads rather than pay)," Marsh wrote in his note. He rates Pandora "overweight," and raised his price target to $20 from $17.

Google is clearly targeting Spotify with this model, but given Google's dominance in ad-supported businesses, one has to wonder why this approach was taken. Google didn't give users a huge reason to switch from Spotify and pay the $9.99 per month ($7.99 per month if users get it by June 30th). It's still obviously very early, with the service having launched in the U.S. just yesterday, but Google could've used its largesse and the fact it has its own operating system, Android, to really put the foot down on its competition.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $118.03 -0.71%
GOOG $748.15 -0.02%
P $13.82 4.54%
FB $105.41 -0.31%
TSLA $229.64 5.22%


Chart of I:DJI
DOW 17,813.39 +1.20 0.01%
S&P 500 2,088.87 -0.27 -0.01%
NASDAQ 5,116.1430 +13.3350 0.26%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs