This Google Music Update Should Have Apple Scared

By Markets Fool.com

When it debuted in May 2013, Google Music All Access did not differ significantly from its many competitors. Like Spotify and Apple's Beats Music, Google Music All Access allowed subscribers to download and stream millions of different songs on demand for a flat monthly fee.

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That hasn't changed, but since its launch, Google has made several major improvements to the service. The latest update, which includes YouTube integration, gives Google's music service a significant advantage over the competition.

Google Music is now the best streaming service
Google Music All Access received somewhat of a tepid reception when it was unveiled at I/O in 2013. The service offered unique integration with Google Music (the search giant's free, cloud-based music storage service) but unlike Spotify, lacked a free, ad-supported desktop version.

Both Spotify and Google have updated their respective services in the 18 months that followed, but Spotify focused more on the economics rather than the quality of the service. Spotify, for instance, now offers a limited, free mobile version and discounts for families with multiple users. Spotify subscribers can get recommendations from their friendsand beam their music to a variety of Internet-connected set-top boxes and even Uber cars, yet the fundamental listening experience remains largely unchanged.

On the other hand, Google's pricing hasn't budged at all -- $9.99 a month, no free option and no discounts. That may make it a non-starter for those unwilling (or unable) to pay but for willing subscribers, Google Music now offers a number of features that put it ahead of the competition.

In July, Google acquired Songza, a Pandora competitor that lacked on demand listening but offered users curated playlists based on current time and mood (songs for "unwinding", "working out", and "studying", among many others). Songza has since been integrated into the full Google Music app, and while Spotify offers playlists of its own, they are not as varied or as topical.

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More recently, Google has also integrated YouTube with Google Music. Called YouTube Music Key, it turns the YouTube mobile app into a powerful streaming service. With YouTube Music Key, videos can be downloaded to a mobile device for offline playback and arranged into playlists for extended listening sessions. They can also be played in the background while another app is open or while the device is locked.

I've been using it for the last few weeks, and though it seems a bit disjointed (having to switch between two separate apps is a bit odd), the combination makes Google Music the most appealing streaming service out there.

Google Music and Spotify offer largely the same, 20 million plus, catalog of songs. Many of these exact songs are also available on YouTube -- uploaded by the artists themselves or their various fans -- but YouTube offers much more: live recordings, rare tracks, and user-created covers. Spotify, YouTube, and Google Music all offer the official, studio version of Fleetwood Mac's "The Chain," for example, but only YouTube carries the half dozen different live recordings of the song made over the band's history.

Apple's Beats acquisition
The acquisition of Beats brought Apple into direct competition with Google and Spotify on this front, but outside of adding Beats Music to Apple TV, the iPhone maker has done little to improve the service since acquiring it.

Persistent rumors, however, suggest a dramatic overhaul is coming, one that could see the Beats brand dropped and the product rolled into Apple's iTunes. According to Re/code, Apple has been pressuring labels to offer a better deal, one that would allow the company to sell its streaming service for just $5 a month (Beats Music is currently $9.99 per month like its competitors).

Both moves could give Beats Music (or whatever it is ultimately called) an advantage over the competition. However, it will not be able to draw from YouTube's treasure trove of content.

Will Google win the streaming war?
But does the competition between music streaming services actually matter to investors? It should.

Whether Apple succeeds or fails in the streaming music market, it may not mean much to investors in the near-term -- so long as the company can continue to sell millions of iPhones.

Yet, over the long haul, Apple's success in streaming music could contribute to its ability to sell those devices. Right now, Beats Music is available on multiple platforms, but if Apple's history is any indication, that may not be the case forever. Apple Pay, iMessage, Siri, and other services are limited to Apple devices -- an Apple-branded streaming service should be no different. If sufficiently attractive, the music service could be another key part of the Apple ecosystem that entices buyers to switch over to (or stay with) the iPhone.

Spotify isn't a public company, but it could be soon. Among the various streaming services, it appears to have had the most success with over 10 million paying subscribers. That user base is likely what investors who buy into the IPO will focus on, but it's long-term viability will depend on how the service responds to the incoming competition.

Right now, that threat lies primarily in Google. And based on features, Google Music has the advantage -- the addition of YouTube is tough to beat.

The article This Google Music Update Should Have Apple Scared originally appeared on Fool.com.

Sam Mattera has no position in any stocks mentioned. The Motley Fool recommends Apple, Google (A shares), Google (C shares), and Pandora Media. The Motley Fool owns shares of Apple, Google (A shares), Google (C shares), and Pandora Media. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.