The WSJ reports that as soon as next week Google will begin selling music in the search results:

Google Inc. will soon let users buy songs or listen to them for free, right on its main results page, as part of a broader push to enhance the offerings on the leading search engine, according to several people familiar with the matter.

The music offerings, from four online music services, are to be packaged in what Google calls a “one box” at the top of a results page, similar to the site’s presentation of weather and financial results.

To lock up these sorts of deals, some of the largest players in dying markets are given a sweetened deal where Google does not directly generate revenue. But after the deal exists for a few years (and Google becomes a leading destination for that type of media) look for a sharp re-negotiation on pricing. And at that point smaller players better cough up the cash if they want to play.

This is why search is such a powerful market position. Google can wedge themselves at the top of any industry with instant, free, and massive distribution. And they can experiment with the business model and integration while starting off free until they have something that works.

Meanwhile the contracts behind such deals often have a strict NDA. So as long as you trust Google it should end up maybe ok. Except for when it doesn’t. In the next couple years this partnering with rights holders and market leaders will hit dozens of markets – further consolidating them. You are either big enough to be #1 or you are #10. If your business model gets crushed when Google starts competing directly against you then it might make sense to invest in other traffic distribution channels and/or other points of differentiation which they can’t clone.

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