Google’s YouTube, one of the web’s most popular destinations and by far the biggest video streaming platform worldwide, officially launched its much-anticipated subscription music tier, Music Key, on Nov. 12.
Despite the service being only in its infancy, YouTube’s impressive reach — the site ranks second behind only parent company Google, with an estimated 1 billion unique monthly visitors — immediately puts the largest streaming services, on high alert. Beware, Spotify, Soundcloud, Apple’s Beats Music and Pandora, because there is a new wealthy, giant competitor in your midst.
Music Key is an overt effort to alter YouTube’s reputation within the music industry, from a free-for-all pro-user experience to a platform that benefits both user and artist concurrently. The service will charge $10 per month (the same as Spotify) and act as a subscription tier above the rest of the platform, which will remain free, with revenues partially paying artists and creators behind the videos. Subscribers will also get access to Google Play, the company’s current on-demand music service.
The biggest perk of Music Key is that by paying the subscription, subscribers can bypass YouTube’s ever-more-annoying banner and pre-roll advertisements, which currently constitute the only current revenue stream for artists on YouTube.
As it rolls out the product, YouTube will hope to avoid the pitfalls that currently have others in the sector, including Spotify and Soundcloud, in hot water. Spotify, long maligned by artists for its paltry payouts per song stream, received a shock when one of its most popular artists, Taylor Swift, pulled her entire catalog from the service a week after debuting her new album, 1989. Swift then went on to sell more records in her first week than anyone in more than a decade, perhaps due in part to the public’s inability to stream it. While Spotify counts nearly 50 million customers, including millions of new subscribers this year alone, their lack of reliable revenue streams (and their unprofitability) coupled with artists’ unhappiness does not paint a pretty picture moving forward.
Up until this year Soundcloud, a massive indie streaming platform known for users who upload remixes and mash-ups of popular songs, has done things quite under-the-radar. In recent months, though, the service was exposed by major labels, primarily Universal Music Group, for using unlicensed content. In response, the platform will introduce advertising and a subscription tier, as well as a deal with Warner Music Group in which it will pay royalties to a label’s artists for the first time.
It’s still too early to tell how Music Key has been optimized to avoid these issues. Many analysts see YouTube suffering from its existing reputation and massive catalog of music, in that even if millions sign up for Music Key, hundreds of millions more will be satisfied with the service as it stands now. Others say that YouTube is just the next Spotify, a service that appears successful but has profitability issues and a poor reputation with artists.
But YouTube is doing all it can to counteract that, starting with its deal with Merlin, the indie behemoth that represents more than 2,000 smaller labels, signed a day prior to the Music Key launch. YouTube also has deals in place with all three major labels, which is more than can be said for Soundcloud.
At the moment, Music Key is still in beta testing — a common theme among Google’s product rollouts — and is available by invitation only. It will be available to the public by next year.