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Google Trips Itself in the Sprint for Online Music

In the race for the online music market, Google (GOOG) has again tripped itself while Apple (AAPL) and Amazon (AMZN) continue cruising to an early lead. In the middle of negotiations with the labels, Google abruptly changed the terms of the deal it wanted, putting a halt to progress. Supposedly talks are "broken," according to All Things Digital writer Peter Kafka.

Nothing unusual here. When it comes to owners of video, music, periodical, and book content, Google has repeatedly bungled crucial negotiations. That's a direct reflection on the management culture of the company and again raises the question of whether Larry Page has the stuff to lead the company.

According to a recent post by ex-Grokster head Wayne Rosso, Google is "disgusted" with the labels and may give up on a more expansive service it wanted to introduce, opting instead for a less ambitious Amazon-style music service.

For years, Google has wanted its access to content and ability to disseminate it to grow faster than rights owners have been comfortable with. Here are a few examples:

Not that Google is necessarily bad at negotiation. Think of the hectic acquisition pace it maintains. However, there's a big difference between waving a lot of money at a small company and charming a big one. Page's recent drive-by earnings call performance doesn't suggest a quick improvement in Google's coaxing powers. Contrast that to Apple, which, over time, nudged the music labels from limited support for online music sales to an all out embrace.

If Google can't find that cross between savvy and seduction, it will be hard pressed to sufficiently diversify its lines of business and keep pace with major competitors.


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