Universal to sell DRM-free music with Google's help

Note: this post is part of the R/WW Files on Online Music.

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Universal Music Group (UMG) is teaming up with Google and a new start-up company called gBox, Inc., to sell DRM-free music on an experimental basis, in what many will interpret as a direct challenge to Apple’s iTunes Music Store (iTMS).

The way gBox is expected to work — it debuts August 21 and ends January 31, 2008 — is that the service will get referrals through ads that UMG purchases from Google at standard advertising rates. When users search for a band or a song using the Google search engine, ads will appear next to the results directing them to gBox.

gboxThere DRM-free songs from the Universal catalog will cost 99 cents, 30 cents less than what the iTMS sells DRM-free music from the EMI label. Together Universal and EMI are two of the top four record labels in the world.

Copy-protected songs purchased through the iTMS won’t play on portable digital audio devices other than the popular iPod, which has sold 100 million units worldwide, and iPods can’t play DRM-protected songs purchased at rival online music stories. By ditching DRM, the record labels and competing music download services can reach iPod users without going through the iTMS.

UMG will make DRM-free songs available to other online retailers as well, including Wal-Mart, Best Buy, and Real Networks (Rhapsody), but only gBox will get Google referrals.

Google shows why DRM is evilGoogle’s involvement with gBox and UMG’s DRM-free experiment looks sinister enough — many observers believe gBox will pose a direct threat to the iTMS. But when you get down to it, Google’s participation may simply be what it does best: search and making oodles of money from AdSense.

The real drama here is UMG’s experiment, if other major music labels follow, how the average consumer responds, Universal’s love/hate relationship Apple and Steve Jobs, and what Apple does or doesn’t do to counter-punch, if needed.

Think about it.

Google’s activity of late points toward Apple, not away from it. There’s the recent release of Apple’s iLife and iWork applications, which include tighter integration to certain Google products, the availability of YouTube on the AppleTV and iPhone, and Google Maps on the iPhone. And let’s not forget Google CEO Eric Schmidt sitting on the Apple board of directors.

Apple and Google alliance just got strongerWhy would Google risk pissing off Jobs, harming the iTMS, and stunting future growth opportunities between the two companies for something other than what it does during the course of its day — search and making money off text ads?

gBox fits perfectly into the Google model.

Google will not get a cut of music sales and describes its new arrangement strictly as an advertising relationship.

Additionally, gBox Chief Executive Officer Tammy Artim has said gBox’s marketing strategy is to include Google and social networking sites, not just using the traditional approach of driving music buyers to a specific site to discover new artists and songs and to make purchases.

Instead of doing marketing and (advertising on) billboards on Highway 101 to go to gBox, we want to take advantage of the viral element that has been so successful for companies in the past, Artim said.

UMG itself notes that the importance of the DRM-free experiment will “provide valuable insights into the implications of selling our music in an open format.” Google is listed as a participant, along with Wal-Mart, Best Buy, Rhapsody, Transworld, Passalong Networks, Amazon.com, and Puretracks. The focus of gBox is to make the “search and buying process as simple as possible” and, since consumers search for music online, “Google is a powerful way to drive consumers to this test.”

UMG, whose labels collectively account for one out of every three new releases sold in the United States, according to Nielsen SoundScan data, will make albums and tracks available from artists such as Amy Winehouse, Fall Out Boy, 50 Cent, Black Eyed Peas, Maroon 5, Sting, Elvis Costello, among many more.

If gBox is successful, and in doing so chips away at the dominance of the ITMS, it will be due more to the allure of DRM-free music and the record industry’s battle against Jobs and Apple than it will be because of Google’s involvement.

last100 is edited by Steve O'Hear. Aside from founding last100, Steve is co-founder and CEO of Beepl and a freelance journalist who has written for numerous publications, including TechCrunch, The Guardian, ZDNet, ReadWriteWeb and Macworld, and also wrote and directed the Silicon Valley documentary, In Search of the Valley. See his full profile and disclosure of his industry affiliations.

21 Responses to “Universal to sell DRM-free music with Google's help”

  1. “There DRM-free songs from the Universal catalog will cost 99 cents, 30 cents less than what the iTMS sells DRM-free music from the EMI label. Together Universal and EMI are two of the top four record labels in the world.”

    Is that a typo? How is $0.99 $0.30 less than $0.99?

  2. Vo Beatdown says:

    Advice Network, iTunes DRM free songs cost $1.32. The ones >with

  3. RPenn says:

    Universal also announced that it would be selling DRM-free music downloads through both Wal-Mart and Best Buy websites.

  4. Josh says:

    Advice: The typo is in the use of the word “There” (rather than their). DRM Free tracks on iTunes are $1.29 each. Less $0.30 = $0.99.

  5. Gil Janus says:

    From the gbox.com website:

    Hey, you need to be on a Windows machine and use Internet Explorer to play with gBox.
    We are working hard to support FireFox users and the Mac, but it will take some time. Big apologies for the inconvenience.

    So much for selling to Apple computer using folks. Also, I don’t use Firefox, I use Safari.

  6. Morgan says:

    I realize this is supposed to be non-DRM but the last place I’d buy anything digital at this point is Google after the video fiasco. The only DRMed movie I have that still works is Zoolander that I got free from AOL last year. And Google couldn’t come up with a solution beyond a $2 with strings attached settlement. Bogus.

  7. Ed says:

    This may work, but people won’t just leave itunes because gbox sells songs 30 cents less. Plus, itunes has very high quality music, lets see how the gbox music sounds.

  8. Pilonog says:

    @Josh: “There” is not a typo. If you read the whole sentence, it says, There (gBox) songs will cost 99 cents, referring to the store as a place, not to the songs as a possession.

  9. David Mackey says:

    Hmmm…Not a big fan of name or logo. Off to a bad start in my book.

  10. If the new DRM-free files are 128kbps MP3s, I think I’ll pay the extra $0.30 for 256kbps AAC.

    And if Universal is so hell-bent on finding lots of providers to distribute this new service, why not make iTunes one of those venues? For those of us with Macs, iPods, and/or iPhones, the integration is convenient.

  11. Erkko says:

    This is a great move from Google. They are just creating an opportunity to have the exact same model with Apple for iTunes, and at the same time getting profits also from Universal’s content sales. The catalog differences of gBox and iTunes even match that plan well.

  12. C.A.Sizemore says:

    That is not a music store that is a PIA. I hope they relaunch with a better store front then gBox.com. I am really hoping Universal/Google make a good run at this and it needs a Podcatching client so I can fire iTunes and delete it.

  13. Yea I agree I hate Itunes and won’t use it. As for the music sales, the music companies should be happy with whatever they get, talk about gouging consumers.

  14. john says:

    I hate Itunes.. and i think the music industry makes enough as it is.

  15. Jake says:

    Nice article.. I guees we will see what happens in a few months!!

  16. Dan says:

    Nice article…. I also hate I tunes. And I agree that music companies should be happy with whatever they get…

  17. Jones says:

    I hate Itunes.. and i think the music industry makes enough as it is.

  18. AC says:

    I thought you needed to be on a Windows machine and use Internet Explorer to play with gBox.
    I know alot of my buddies use Firefox versus other internet web explorers.

  19. AC says:

    It's a possibiltiy that this could work, however, I also think that people won't just leave itunes because gbox sells songs 30 cents less. Plus, itunes has very high quality music and wide variety of it as well, lets see how the gbox music sounds and works. It needs to be something new, yet easy to use as well for the consumer.

  20. enhancement says:

    The catalog differences of gBox and iTunes even match that plan well.

  21. enhancement says:

    The catalog differences of gBox and iTunes even match that plan well.

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