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An Insider Claims That Google Music is Losing Users

A "highly placed digital music executive" is claiming that Google music has been consistently losing customers week after week since it went public back in November 2011. The claim follows a report made by CNET last week that Google's music service isn't living up to expectations, that Google managers have told counterparts at record labels that consumer adoption and revenue are below what they expected.

But this week's claim makes the situation sound even more grim. "I’ve never seen anything like it," the source told music industry insider Wayne Rosso. "It’s astounding. It’s hard to believe that with an install base of over 200 million Android handsets they’re actually losing customers."

The unnamed source states that label executives -- save for those at Warner Music who refused to sign up with Google Music -- are very concerned about what's going on at Team Google, that things are so bad with Google Music that the service could be shut down. Labels are banking on Google Music to be successful so that the entire music sector prospers. After all, with Android controlling a major portion of the mobile market, you'd think consumers would swarm to Google Music out of sheer convenience, right? A failure would not only be perceived as an industry setback, but a significant loss of much-needed revenue.

Right now the big contenders in the downloadable music arena are Apple and Amazon, the latter of which arrived with DRM-free music and cloud storage on the Android platform long before Google launched its Music Beta service. Apple's iTunes will always be the McDonald's of the digital music age, and there's probably nothing any one competitor can do to topple its dominance no matter what they serve up.

To Google's defense, it really hasn't thrown the full force of its "marketing muscle" behind the service. Instead, as of late Google has seemingly dumped its advertising funds into Google Chrome an Google+, infiltrating newspapers, magazines and TV ads. Google managers have even expressed to record labels that it will not fully push its music service until it implements its hardware strategy -- which likely includes the previously reported wireless entertainment system and its own Nexus-branded ICS tablet.

Managers have also told the record companies that they are trying to correct certain issues, CNET reports. What those issues are remain unknown as of this writing.

Is Google in the wrong music business? Reports surfaced last week that music service MOG put itself up for sale, but the company quickly denied everything. CEO David Hyman even said the service had 500,000 active users, but industry experts determined that only 50,000 are actual subscribers. Competing service Rdio is reportedly in no better shape, and probably a little worse. The only subscription service that seems to have substantial growth is Spotify which is approaching 4 million paid subscribers.

"Why? because the user experience is the best, hands down," Rosso says. "Plus the Spotify guys are just smarter than the competition."

It's predicted that two models and two companies will be left standing to duke it out in the music arena: Apple's storefront model, and Spotify's social subscription-based model backed by Facebook.