YouTube's Music Streaming Service Launches
Google and YouTube have finally unveiled their long-simmering music streaming solution, rumored for over a year now, and it's... YouTube. The company has made its streaming service less like a streaming service and more like a new section of the video behemoth, bolstered by licensing deals (as Billboard reported in August) -- with the three major labels and "hundreds of indies," according to a spokesperson (more on that below) -- advertisements on non-video music, and a series of features intended to make finding music and organizing those preferences easier. In a video demonstration to Billboard (via Google Hangout, naturally), the service appeared to be no different from the YouTube app, separated from the original service by a tab, with a few tiny new buttons added to the default mobile interface we were shown.
Meanwhile, YouTube Music Key is the paid tier of Google's new initiative, which will cost $9.99 and enable offline and ad-free listening. Key will launch with an invite-only beta this coming Monday (Nov. 17) in the U.S., U.K., Ireland, Spain, Italy, Finland and Portugal. All Key subscribers will also be given access to Google's existing streaming service, Google Play Music.
YouTube's existing "catalog" of songs with official music videos will be expanded through the addition of video-free songs. Music Key subscribers will be able to choose music videos, playlists and songs for offline listening. The free service also comes with a Pandora-like one button solution to listening, an "endless playlist" based off a listener's song or artist choice.
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Adoption will likely come quickly for YouTube's new features. The company's decision to make the music service and Key inextricable from YouTube itself means that its immense viewership (and listenership) is already on the service. However, one of YouTube's biggest draws for fans is music not available elsewhere -- because it's not supposed to be there. For instance, the deluxe edition of Taylor Swift's 1989 was available for (unsanctioned) streaming at the time of this writing. It's likely that music companies with which YouTube hasn't signed deals will be far more aggressive in copyright takedown requests. (Only labels and publishers that have deals with YouTube can use the Content ID takedown system.)
As far as converting users from the free to paid tier, it may not matter that much, given the scale at which YouTube operates currently along with the addition to its music offerings. The company claims 6 billion hours of video are watched by 1 billion unique visitors each month, and music videos are said to make up a very large part of that pie -- 38.4 percent, or 2.28 billion hours, according to one estimate. It will generate vast amounts of money through advertising, as it already does. eMarketer estimates the company will bring in $1.13 billion in advertising this year. What isn't known, and likely won't be, is the structure of the company's deals with labels and publishers with regards to advertising revenue versus subscription payouts.
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The launch of YouTube's play at music (sorry) and paid Key service will inevitably make it the most-listened to music service -- after all, it already is. Its three top competitors in the streaming space -- Spotify, SoundCloud and Pandora -- reach either comparable audiences or fractions thereof. The last listener metrics that Pandora released were for May of this year, with 77 million users listening to 1.73 billion hours of music that month. The last listener hours metric released for Spotify, back in Dec. 2013, touted the company's 4.5 billion listening hours over the course of that year (a figure that has no doubt grown since that announcement). SoundCloud doesn't release listener hour statistics, but claimed over 250 million listeners per month last November (again, a number that's likely larger at this point), or 3 billion per year. YouTube's yearly listening hours -- without the non-video catalog it's just added -- are at 4.6 billion hours across 12 billion visitors per year.
That's a lot of listening. But getting that catalog wasn't smooth as silk for the company.
YouTube was pilloried over the summer as independent label bodies went public with concerns over licensing negotiations with the company. As mentioned earlier, YouTube has confirmed deals with "hundreds and hundreds" of indies, but a report from the Financial Times yesterday (Nov. 11) says that YouTube has inked a contract with Merlin, the "fourth major" which represents over 20,000 independent labels. For those keeping score at home, that's more than "hundreds and hundreds." The disconnect is that, while Merlin represents indies, it doesn't dictate digital licensing for all of them. One label may use Merlin for its distribution deals but handle everything else in-house, for example.
Whatever YouTube can add to the bottom line of the industry will no doubt be more than welcome, but it doesn't mean the immediate end of the debate over streaming's contributions to artists' wallets and its effects on the listening and buying habits of fans. Time will tell.
Update: The infringing upload mentioned in this article as appearing on YouTube, Taylor Swift's 1989, has since been removed.