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Google Announces New Music Service

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The world's most popular Internet search engine provider Google Inc.’s music service, Google Play Music recently came out with a new scan and match feature to better compete with its rivals Apple Inc. (AAPL - Free Report) and Inc. (AMZN - Free Report) .

Google announced its digital music store, Google Music almost a year ago, debuting with millions of songs from leading music companies like EMI, Sony Music and Universal.

The new scan-and-match feature allows a user’s music to be matched in the cloud so that songs can be played on any authorized device. The service enables users to upload their music to the cloud from their respective files. The time taken for the upload depends on the amount of music that the user wishes to upload. Users can then log into Google Play to listen to the music stream through web-connected music players. A user can upload up to 20,000 songs to Music Play.

The service is similar to the ones offered by Apple (iTunes Match) and (Cloud Player), which allow a user’s music to be matched in the cloud. Unlike Apple or Amazon, who charge about $25 per year for their respective music services, Google’s service will be free.

According to the market research company, NPD Group, Apple accounted for 64% of U.S. music sales online, followed by Amazon at 16%, Google at 5%, and other services making up the rest. Though Google is far behind its competitors, it is trying to attract more and more users through its new ideas and features at no extra cost.

We believe that one of the key strategies for Google Music remains the expansion of its songs archive. This deal will allow users to access a greater range of content, a key factor for Google to better compete with rival music destinations like Apple's iTunes Store, Amazon, as well as streaming services such as Spotify, Deezer and Rdio.

Google has done well in the third quarter, with its gross revenue touching a record $14.10 billion. Revenues from both Google-owned and partner sites continued to grow in double digits on a year-over-year basis. Historically, Google has always fared better than Yahoo Inc , which has been struggling to uphold itself and Microsoft (MSFT - Free Report) , which is yet to gain critical mass.

However, legal entanglements related to competitive matters or patent infringements remain an overhang. Google retains a Zacks #3 Rank (Hold).

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