YouTube Preparing to Launch New Music Service

YouTube is preparing to launch a new music service that will compete with the already established streaming services such as Spotify and Apple Music. The new service follows the attempts of YouTube offering an upgraded subscription to their free site, YouTube Red, and the music service they already offer from their parent company, Google Play Music.

A new and improved music service from YouTube will help avoid speculation from music labels that the site offers free music which is harming the music industry. In 2016 digital revenues overall grew by 17.7% to US$7.8 billion, driven by a sharp 60.4% growth in streaming revenue – the largest growth in 8 years. This more than offset a 20.5% decline in digital download revenue. Streaming now makes up the majority (59%) of digital revenues. For the first time, digital revenues make up 50% of the share of total recorded music industry revenues.

YouTube already has a vast marketing space in which businesses can promote themselves and their products through ads that appear before, after, and sometimes, during videos. With the new music service, the opportunity to advertise will only increase. The free music service will come with ads for users, and only those who wish to upgrade to the paid service will receive ad free listening.

YouTube plan to increase advertisements for users that frequently use the site for listening to music. They are hopeful that the annoyance of the advertisements will encourage users to give in and purchase the upgraded subscription but will this just push the consumers to go elsewhere?

As long as the users are pushed to an official streaming service, it is likely to be strongly welcomes by record labels and the artists themselves, who see the likes of Apple Music and Spotify as one of their main sources of income, alongside concert ticket sales and old school CD sales.

Whilst it can be seen as a win for those within the music industry, what about those who like to utilise YouTube for their own ‘video to mp3’ conversions. Those small, independent websites used to be an illegal loophole for those wanting free music on their device. Streaming sites will have hurt their stats, but YouTube specifically going out their way to redirect music users away from their own site is likely to be the final blow.

Spotify recently reached the 100 million users milestone with only 30% of those using the ad-free, paid subscriptions. If YouTube can reach these heights over time, it creates a targeted audience of 70 million people to advertise to, which can only be a positive for the music industry and those advertising companies alike. There’s a long way to go still, but time will tell if it can replicate those numbers.

It is unclear whether the new service will be featured on the existing site and app or if there will be a new platform introduced. However on the current iPhone systems the most recent YouTube app does not allow you to continue listening if the app is closed or if the iPhone is locked. This could possibly be a feature specifically for Google Pixel users yet this is limiting the size of the market that can fully utilise the product we will have to wait and see for what this new service will bring.

Drew Jenkins

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