The Sad End of Google Reader and What it Says About The Music Business

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This week Google announced that they would be closing Google Reader. Google Reader is an RSS (Real Simple Syndication) feed organizer. That is, it allows you to pull the blogs to whose feeds you subscribe in to your Google Reader account so that you can read content from a variety of sources all in the same place (i.e. Google Reader) rather than having to navigate from blog to blog.

Google Reader, like many things, became the de facto standard for RSS readers, and, as such, was used as a platform for others to build upon. Flipboard, the wildly-popular iOS and Android App, for instance owes much of its popularity to the fact that it synced with your Google Reader account, and then presented the RSS feeds in visually-appealing manner.

Google claims that they’re retiring Google Reader because usage is down and they’re focusing on other things. This is certainly Google’s prerogative. While, given the uproar on Twitter when the announcement was made, I find it hard to believe that less people are using Google Reader than other Google products that they are keeping around (ahem, Google +). That said, it really doesn’t matter if this is true or not; Google can certainly choose to retire whatever they want.

As above, there was a bit of a Twitter uproar when this news was announced, and my sense is that the retirement of Google Reader has far more to do with the fact that the uproar was more immediately visible on Twitter than on, say, blogs. Blogs, of course, are the raison d’etre for Google Reader. Twitter, for many, is, in and of itself, a more elegant form of Google Reader, where the blogs are replaced by Tweets. As such, Google Reader, and RSS, generally, appears antiquated (funny how, in this context, Google’s choice of the word “Retire” takes on a different meaning).

Antiquated or not (as evinced by the Twitter uproar), many people continue to use Google Reader. Additionally, RSS is a fiercely important part of the DNA of the Internet. I had a sort of heart-wrenching moment immediately upon hearing the end-of-Google-Reader announcement because I immediately thought of Aaron Swartz. Mr. Swartz was instrumental in the development of RSS.

Technology, both because of Moore’s law and economic imperatives, races ever-faster along. There’s nothing inherently wrong are bad about this, and, even if there were, there’s not a damn thing we can do about it. What’s troubling, however, is how reliant we become on services that can quickly and irrevocably be eliminated.

The music industry—always the canary in the coal mine—has had several tastes of this: on a large-scale there we things like the original Napster and Myspace, and on a smaller—but no less painful to those who loved the services—scale, there was and (I know is still around, but its growth seems to have massively slowed).

With Google retiring Google Reader, anyone who uses any of the company’s other services should be a bit concerned. Many of us, myself included, have become reliant not just on things like Gmail, but, increasingly, on these other services: Google Calendar, Google Docs, Google Chat, etc.

I’ve often marveled that they’re “free”; knowing, of course, that they’re not really free—you’re paying by providing Google with data, which they then in turn use to improve their ad business. I’ve also often thought that I’d really rather pay a few dollars every month in order to improve the likelihood that they don’t stop supporting these services. In fact, if Google came to me right now, and said, “You can keep using Google Reader, but it’ll cost you $3 / month,” I’d do it in a heartbeat. They won’t, of course. $3/month from the avid Google Readers wouldn’t pay for Google’s daily employee-lunch bill.

This is, in some ways, the problem. As above, many of Google’s products are essentially loss-leaders; things that have no direct top-line revenue impact for Google, but are important in so far as they provide other forms of value to Google (data collection and customer retention). Again, the record industry has been through this. CDs became a loss-leader for “Big Box” retailers who would advertise them below listed retail price in order to entice shoppers to come into the store, and then perhaps buy a high-margin microwave (with a warranty). This, like the “free” services Google offers was great for the customer…for a while. The customers got CDs at a much lower cost than they could elsewhere. However, once these CDs ceased being an effective loss-leader….poof.

This is what happened with Google Reader: It’s not an effective loss-leader for Google.

There are larger ramifications. While Google Reader’s retirement won’t kill RSS, it will (further) marginalize it. With its marginalization, another key tenet of the Internet is uprooted: The Internet is meant to be a medium for story-telling and sharing. Aaron Swartz knew this, of course, and it’s why he worked tirelessly to ensure that information and stories could be easily and effectively and freely shared.

Certainly there are alternatives to Google Reader. My personal favorite is Reeder. Aside from its killer features, the thing I like most about Reeder is that it’s not free. That’s right, my favorite “feature” about Reeder is that it’s not free. I like this because it shows that the developers are trying to build a business around Reeder itself, rather than using it as a loss-leader for something else. This, of course, doesn’t guarantee that they’ll succeed; they could go out of business. It does, however, mean that there’s a clear value-proposition presented to the customer: “If you like our services, you have to pay us in order for us to keep doing it.”

Again, the record industry. Most, if not all of the “music services” out there offer fundamentally free products. Spotify seems intent to really not ever charge their customers. Pandora runs so few ads that it’s easy to forget they run them at all. Rdio just went to a 6-month free trial. If these companies can not figure out a way to charge people, what is their underlying business goal? It can’t be a direct financial imperative. That means that they must be loss leaders for something. Well, the “loss” part is clear. I’m not sure about what it leads to, however.

But that’s sort of the scary part. What is Spotify going to do? And, if they’re never able to convince enough people to pay, how can they not disappear. People would be sad if Spotify or Pandora disappeared. People like these services. Yet, either Spotify/Pandora can’t/won’t charge people enough to increase the likelihood of their longevity, or people just don’t value them enough to pay.

One of the things I’m proudest of with respect to, ConcertVault,com, and PASTE.COM is that we made a decision that what we have and what we do is of value, and that our customers feel this way too, and they want us to keep doing it. So we charge, and those who value the services (and there is an ever-growing number of these people) pay, and those who don’t, don’t.

After seeing what happened to Google Reader (and to those who will miss it) any company or band who is relying on some vague strategy of “if you build it, they will come” approach (often referred to as “freemium”) should take pause. The historic transactional exchange between artist and customer has been music-for-money. That ship has sailed (if it ever really existed). No longer can an artist expect any meaningful financial compensation for their music; whether Pandora/Spotify/Rdio, et al. pay you $.003 per stream or $.0003 neither is going to add up to anything for the vast majority of artists.

So what is one to do? You have to articulate your value to your customers, and then charge them for it. While bands can’t charge for their songs, they can charge a membership fee to their customers that would allow these customers to get not only songs, but also—perhaps—exclusive photos, demos, backstage access, discount on merch, etc. etc. Will everyone pay? No. Will some? It depends on whether or not what the business or artist (and the two, sadly, are now indistinguishable) is doing is valuable enough to the customer that they want to see it continue. I wish Google Reader had given us the chance to do so.

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