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YouTube debuts subscription music service

 ©REUTERS ©REUTERS

 YouTube on Wednesday introduced a long-rumored subscription music video service with ad-free access to tunes in a challenge to Spotify, Pandora, Apple and others, AFP reports.

YouTube Music Key launched in a test, or beta, mode, in Britain, Spain, Italy, Finland, Portugal, Ireland, and the United States with free trial periods, and introductory monthly fees of $7.99.

"Thanks to your music videos, remixes, covers and more, you've made YouTube the biggest music service on the planet," the Google-owned YouTube music team said in a blog post.

YouTube Music Key is designed to let users listen to music without ads; to keep playing music videos even if device screens are locked or other applications are in use, and to play music even when not connected to the Internet.

Subscriptions to the new YouTube Music Key will come with access to Google Play Music service for mobile devices.

The service is being launched first with invitations sent to big music fans, then will be made available worldwide, according to Google, which bought the video sharing platform in eight years ago in a deal valued at $1.65 billion.

    Getting labels on board 

 YouTube recently inked a deal with a group of independent record labels as part of the behind-the-scenes work to provide content for Music Key.

YouTube struck an agreement with Europe-based rights agency Merlin after months of negotiations, the Financial Times said Wednesday in a report citing sources familiar with the matter.

Record labels representing 95 percent of the music industry have already signed up to the new terms but Merlin, which represents more than 20,000 labels from 39 countries, had been holding out.

Contacted by AFP, Merlin declined to comment.

Google also declined to comment on the report, but said that "hundreds of major and independent labels" have partnered with YouTube as it expands into a subscription service.

The California-based Internet titan echoed an earlier statement that hopes YouTube will serve as "a global platform for fans and artists to connect, and as a revenue source for the music industry."

YouTube earlier this year threatened to block the videos of artists like Adele and Arctic Monkeys on its free site if they did not sign up to terms of the subscription service.

YouTube is the world's biggest online source of free streaming music and the site has about a billion users a month.

Industry tracker eMarketer expects YouTube to rake in about $7.2 billion in ad revenue this year, up from $5.6 billion in 2013. More than half the money taken in this year will go to YouTube content partners, with the Google-owned service keeping about $3.24 billion, according to eMarketer.

Online radio continues to gain popularity in the United States, with adults here spending an average of 39 minutes daily listening to it, the industry-tracker said.

California-based Pandora was ranked the top source for streaming radio.

"Freemium models combining free ad-based access and fee-based subscriptions have become the norm in digital media -- Spotify, Pandora, and Hulu come to mind -- and there's no reason Google can't do the same with YouTube," said eMarketer senior analyst Paul Verna.

The analyst expected advertising to remain the primary source of revenue at YouTube.

YouTube chief Susan Wojcicki said at a technology conference in California last month that the ad-supported model "is really great in the sense that it has enabled us to scale to a billion users (and that) anyone can access the content."

But she added that "there are going to be cases where people will say, 'I don't want to see the ads,' or, 'I want to have a different experience.'"

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