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CNET: Google Music not living up to expectations

By Greg Sandoval, CNET:

Google Music was supposed to have an inside track marketing music to the 200 million Android users, but performance so far is not what was expected.

Three months after launching, Google Music hasn’t lived up to expectations, CNET has learned.

Google’s managers have told counterparts at the labels that customer adoption and revenue are below what they expected, according to multiple sources with knowledge of the talks.

Google Music has been live for barely a full quarter, so nobody is panicking. Google has yet to throw the full force of its marketing muscle behind the service, and managers have told the record companies that they are trying to correct certain issues. Still, the numbers are low enough for some in the music sector to be concerned, the sources said.

A Google representative declined to comment.

Google Music was supposed to be a music powerhouse. As a companion service to Android-powered mobile devices, the service has a massive potential user base. At the time of Google Music’s November launch, there were more than 200 million activated Android phones and tablets.

If Google managed to convert just 10 percent of those device owners, it would mean 20 million customers. Google Music sells downloads, and also streams songs to users who store their music libraries on the company’s servers. The service sells tracks from a host of indie labels as well as three of the four top major record companies. Google has yet to license tracks from Warner Music Group.

Google managers have told label executives that the service will get a boost once Google implements its hardware strategy, the sources said. Google plans to start competing against Apple by building an array of consumer devices.

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