Google beat Apple to the music subscription service punch this week, perhaps the doing of record labels who wanted to put Apple in its place, an analyst said.
At its Google I/O developers conference Wednesday, Google unveiled All Access, a $9.99 per month streaming music service that will compete with existing services such as Pandora and Spotify. Customers who sign up for the service by June 30 will pay a discounted fee of $7.99 a month.
The service went live yesterday in the U.S.
The launch of All Access means that Google beat Apple to the subscription streaming party.
"Google stole Apple's thunder," said Gartner analyst Van Baker today. But because Apple's strategy is to deliver a streaming service to its users -- not those owning Android-powered smartphones and tablets -- Google being first doesn't matter much in the long term. "It's inevitable that Apple will do [the same], but its focus will be on its [iOS] users, just as Google's is on Android users."
Baker expects Apple to roll out a streaming music service at its Worldwide Developers Conference (WWDC), which runs June 10-14 in San Francisco, the venue the same as I/O -- the city's Moscone Center.
The take-aways from Google's preemptive strike are two-fold, said Baker. "First, to a certain extent, the record labels have realized that streaming is inevitable," said Baker. "And second, this is a little bit of pushback against Apple, this agreement with Google."
Apple and the record labels have always had an uneasy alliance, with the latter often angry at the aggressive terms the former demands, yet unable to refuse because Apple's iTunes behemoth is the player in digital music.
The music industry cannot ignore subscription services: According to data released last month by the International Federation of the Phonographic Industry (IFPI), a trade group representing some 1,400 member firms, music subscription and ad-supported streaming services accounted for 20% of the globe's digital revenues in 2012, up from 14% in 2011.
Apple's interest in a streaming service is thus not only driven by the long-running strategy to sell more hardware -- more iPhones and iPads -- but also by the money to be made from the service itself, said Baker.
"Apple's services are getting big enough and profitable enough for the company to go more toward a balanced business model," said Baker. "They're beginning to see a reasonable revenue and a reasonable profit from services."
Indeed.
In the quarter ending March 31, Apple posted revenue for its "iTunes/Software/Services" group of $4.1 billion, or about 9% of its total revenue for the period.
The $4.1 billion represented 75% of what Apple collected in the quarter by selling Mac personal computers, and 89% of the Windows revenue reported by Microsoft during the same three months.
