One of the themes that we write about a lot here in the Consumer Product Strategy team is disruption. Time and time again, incumbent traditional companies fail to respond effectively to the disruptive threat of innovative competitors and/or technology and as a result find themselves either utterly destroyed or dramatically reduced. Think Nokia’s response to the iPhone, think the record labels’ response to Napster et al. The thing about the labels, though, is that they have a monopoly of control of supply, so instead of being usurped by new entrants, disruption has whittled away the best part of half of their business over the last decade or so.

Which brings us onto Google Music, which looks set to launch today with no more than a locker service. More to the point, an upload-your-music-collection locker service (with limits) rather than a point-and-match service. Which means sitting down and painfully uploading all your songs to the cloud. Sort of like the first time you ripped your CDs, except slower and more painful. Upload locker services – arguably – don’t require rights owner licenses; point-and-match services do. Licenses that service providers such as Google argue are too expensive. Thus Google has followed Amazon’s lead, bypassing label licenses in favour of a – supposedly – DMCA and Fair Use compliant service.

So with all the expectation surrounding Google’s move into music, why is this all it has come to market with? Google lays the blame firmly at the feet of the labels.

Google’s director of content partnerships Zahavah Levine told Billboard ". . . a couple of major labels were less focused on innovation and more on demanding unreasonable and unsustainable business terms."

Of course, Google’s #1 aim for its music offering is to help grow the Android OS platform and in turn to help sell Android devices. Thus, just as Apple launched iTunes with ‘Rip, Mix, Burn,’ this is just a step on the journey (in fact, there are some cool features in the player, such as recommendations based on audio signal characteristics of songs). 

But the problem for consumers is that they are effectively being forced to choose between licensed streaming music services (Rhapsody, rdio, Spotify, MOG, Napster, etc.) and locker services such as Amazon's and Google’s. The simple fact is that both should be part of a combined user experience. Streaming, purchasing, discovery, storage, and playback should all be brought together into a 360 Degree Music experience. That's what consumers want and is the logical answer to the questions that the emergence of the cloud poses. 360 Degree Music experiences are what will sell devices and drive music consumption and revenue, not locker services alone.

Now that Amazon and Google have both shown their hands, the last hope for a 360 Degree Music experience this year lies with that being a royal flush that Apple is holding close to its chest. 

Point-and-match locker services as part of an on-demand licensed music offering will come – as will unlimited MP3 subscriptions, interactive apps as the next generation of music products, and music discovery services that join the digital dots for mainstream music fans. But for now, and for a couple more years yet, we’re going to have to watch the disparity between emerging consumer behavior and existing music products and business models diverge until rights holders and service providers find common ground.

In the meantime, what is the winner in all this?  Illegal free, of course.