Grooveshark have worked hard to pen legitimate label deals. While some may wonder why iLike and Lala were chosen above others to benefit from the Google deal, many more are worried that the companies will be unable to offset label fees via premium subscriptions and advertising.The question period after today's launch of Google's OneBox music search focused a great deal on the project delivering users with easy "legitimate music" versus other illegitimate sources. While discussion was centered around squashing the millions of illegal torrent files available for download, the truth is that a number of streaming music sites like
Said rap superstar Mos Def, "I personally wasn't happy to see how the labels responded to Napster. I thought that was a missed opportunity with the fans. It seems to me that this project revisits this with a better perspective towards the fans- not from an adversarial point of view. " Still, many wonder whether this new fan-friendly discovery engine will bankrupt those footing the bill. While iLike likely has a huge amount of resources from MySpace, Lala is betting on the fact that users will use up their initial 25 song credits and take the plunge to premium.
Last month MOG CEO David Hyman spoke to ReadWriteWeb about the launch of his subscription service. When asked if he would offer free listening, Hyman declined saying, "The problem with free services is that if too many people use them, you can't offset the licensing fees with ad revenue. There's only so much you can do with advertising, but the [pure] subscription model ensures that you're running something sustainable."
In anticipation of a future European launch, one reporter suggested Spotify as a legitimate source for streaming music to Google VP of Search Marissa Mayer. Said Mayer knowingly, "Your suggestion is duly noted."
If Hyman is as confident in his hunch about freemium services as we think he is, he may even be hoping that Spotify cuts a European Google deal and burns through its cash before its US launch. It'll be interesting to see if Google will be the catalyst in swaying listeners to pay for their purchases or if streaming music startups will continue to tweak and revisit their monetization strategies.
For complete launch details visit Frederic Lardinois' ReadWriteWeb coverage.
Photo Credit: Ibrahim Lujaz