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Music is pleasant to one's ears, but it is likely to be the next battlefield for technology giants Google and Apple.
Google is planning to launch its own music store, intending to bring an end to the 7-year dominance of Apple's iTunes music store. Apple launched iTunes in 2003 and now it controls about 70 percent of the market.
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Google's Vice President of Engineering Andy Rubin, the person behind the search giant's Android platform, is reportedly in talks with several music labels over securing licenses.
Rubin is reportedly expecting to run the service by Christmas and plans to settle the talks before the next release of its Android operating system, code named Gingerbread, due in the fourth quarter of this year.
Though Google has not signed any licensing deal with major labels, it is believed that labels are excited about the prospect of Google entering the music industry.
Industry Impact
Google, with its resources, reach and strong market for its Android platform, could pose a formidable challenge for Apple's iTunes and its entry could possibly change the landscape of the music industry.
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Moreover, Google can offer a number of products and services through its Android platform for mobile phones as well as through web browsers.
Market analysts have said Google could be successful in its latest weapon against Apple, as it gets vital information about people's taste in terms of music and what type of music they are looking into through its search engine platform.
Music labels are welcoming Google's move as it could reduce their dependence on Apple for digital music sales and as several have expressed concerns with Apple's control over song prices. In addition, Google could bring additional revenue streams for music labels and expand the market beyond Apple, especially amid falling industry revenue.
On a global basis, recorded music revenue dropped 7 percent in 2009 to $17 billion, according to the International Federation of the Phonographic Industry (IFPI), while Recording Industry Association of America said music sales in the U.S. fell 12 percent to $7.7 billion in 2009.
However, Digital music sales rose 9.2 percent to $4.3 billion, more than ten times the digital market value in 2004. Digital channels now account for 25.3 percent of all trade revenues to record companies. In the US, digital sales account for nearly half - 43 percent - of the recorded music market, IFPI said.
With Android phone sales surpassing iPhone sales in the first half of the year, Google could bring millions of potential customers to the table.
Shipments of smart phones running on the Google-backed Android operating system grew at an incredible rate of 886 percent in the second quarter, according to research firm Canalys.
According to a data from iSuppli, Android will be used in 75 million smart phones by 2012, up from 5 million in 2009. Meanwhile, iOS usage will amount to 62 million in 2012, up from 25 million in 2009.
By 2012, the global market share of Android will soar from 2.7 percent in 2009 to 19.4 percent, while Apple's iOS for the iPhone will see its share rise to 15.9 percent in 2012, up from 13.8 percent in 2009, iSuppli said.
However, Apple has the advantage of having led the market since 2003 and that will work in favor of Apple versus Google as any product (even though from a big firm) takes some gestation period for delivering returns.
For example, Amazon.com, one of the leading online retailers, unveiled its MP3 service in 2007 but it has managed to capture only over 10 percent of the market.
But, it is more or less certain that Google's entry into the music industry would be a giant and significant move for the California-based company and its competition with Apple's iTunes will be closely watched by the industry.
