YouTube on Wednesday introduced a long-rumored subscription music video service with ad-free access to tunes in a challenge to Spotify, Pandora Media Inc, Apple Inc and others.
YouTube Music Key launched in a test, or beta, mode in Britain, Spain, Italy, Finland, Portugal, Ireland and the US, with free trial periods and introductory monthly fees of US$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.
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 eight years ago in a deal valued at US$1.65 billion.
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 on 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.
Google 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 is the world’s biggest online source of free streaming music and the site has about 1 billion users a month.
Industry tracker eMarketer expects YouTube to rake in about US$7.2 billion in ad revenue this year, up from US$5.6 billion last year. More than half the money taken in this year will go to YouTube content partners, with the Google-owned service keeping about US$3.24 billion, it said.
Online radio continues to gain popularity in the US, with adults 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,” eMarketer senior analyst Paul Verna said.
The analyst expected advertising to remain the primary source of revenue at YouTube.
YouTube CEO 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.”
However, 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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