WHAT: YouTube is putting the finishing touches on an on-demand paid music service with an eye toward debuting the service later this year. The service, designed with mobile listening in mind, will have a free component and a premium $10-per-month tier that offers unlimited access to a full catalog of tracks similar to what’s already available through YouTube parent Google’s All Access subscription music service. Premium features would include the ability to remove ads and cache music for offline listening. Those familiar with YouTube’s plans say it is similar to “Spotify, but with videos.”
WHY: YouTube’s primary goal is to continue amassing eyes and ears to its mobile platform to sell ads, its primary source of revenue. As a result, the service could likely have a substantial free component that offers unlimited listens supported by ads, even on mobile devices. In that case, the paid tier would be more of a “soft sell” with a couple of added features including the removal of ads. This is essentially the model that Pandora pursues, concentrating most of its efforts to selling ads, rather than selling its $3.99-per-month, ad-free service, Pandora One.
HOW: Many younger listeners already use YouTube as a free, on-demand jukebox. The challenge for YouTube has been to create a service that would be better than what it currently offers. One big added feature could be the ability to stream full albums. Currently, not all songs on an album are available on YouTube because artists generally select one or two tracks from any single release to feature in a music video. With the new service, full albums will be available. The question is, what will YouTube display for songs that don’t have official music videos? Will it use stock photos? Album covers? Fan-generated videos? For now, YouTube isn’t saying.
IF: YouTube already has the required music licenses from the three major record companies for an on-demand service that parent company Google negotiated earlier this year for its music service, which is available through the Google Play store. However, YouTube is still in the process of nailing down agreements from independent rights owners. If those negotiations stall, YouTube will have to decide whether to proceed with the launch without those catalogs or wait until it has a more complete set of offerings.