Following months of increasingly hard-to-follow controversy, video streaming giant YouTube has finally announced its paid music subscription service, YouTube Music Key. The platform will allow ad-free music streaming for US$9.99 a month, giving users access to music videos and video-free songs.
Key is set to launch in invite-only beta form — only a limited group of people who play the most music on YouTube will have access — on 17th November at an initial promotional price of US$7.99 a month, and will be bundled with Google Play, the music streaming service owned by YouTube’s parent company.
As Billboard reports, the service is expected to expand to the public some time in 2015, with the company focusing on mobile devices and allowing users to play music while simultaneously using other apps, as well as caching videos for offline use.
Meanwhile, non-subscribers will also notice some changes in their YouTube experience. Under the ‘Music’ tab on the site’s homepage, users will be better able to organize and search through music. There will also be an option that allows for continuous listening, similar to Pandora, based on a choice of song or artist.
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“Until today you couldn’t easily find and play full albums. In the coming days, you’ll be able to see an artist’s discography on YouTube, and play a full album with both their official music videos and high-quality songs our music partners added to YouTube,” wrote YouTube on their blog.
If that doesn’t seem like such a big deal — after all, it’s pretty easy to find any song or video you like on YouTube as it is, right? — then the major difference is that the streaming giant has signed licensing deals with the three major record labels, and as of yesterday, a coalition of indies.
The latter proved particularly troublesome for the company. Following YouTube’s initial announcement of their plans to launch a music subscription service late last year, they faced resistance from indie label representative body the Worldwide Independent Network (WIN).
WIN alleged that YouTube was bullying independent labels by offering them significantly lower royalty rates than the majors and threatening to block their content. Following a months-long dispute, YouTube and the indies finally came to an agreement this week.
YouTube’s newly minted relationship with the labels means that unofficially uploaded content is more likely to disappear, replaced by official uploads from the labels with whom YouTube have signed deals.
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However, arguably the most intriguing part of the Music Key launch will be its impact on its peer services. YouTube’s decision to make Key an integral part of YouTube itself means the site’s immense viewership is already on the service by default.
As it stands, the company claims that 6 billion hours of video are viewed by 1 billion unique visitors each month, with music videos making up a very large part of those numbers – 38.4 percent, or 2.28 billion hours, according to one estimate.
What this means is that YouTube is not poised to become the most-listened-to music service, because it already is. According to Billboard, its top three competitors in the streaming space — Spotify, SoundCloud and Pandora — reach either comparable audiences or just fractions thereof.
As for converting users from the free tier over to the paid tier, they have plenty of time to figure that out. With their current model, YouTube already generates vast amounts of money through advertising. According to eMarketer estimates, the company will bring in $1.13 billion in advertising this year.
However, what remains a little less clear is the structure of the company’s deals with the major labels and the indies, as well as countless music publishers, with regards to advertising revenue versus subscription payouts.
