Finally, YouTube rolls out Music Key paid subscription service

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16 Jul 2013
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Google is remixing the music on its
YouTube video site with the addition
of ad-free subscription service “Music
Key” and a new format designed to
make it easier to find millions of
songs that can still be played for

The subscription service is part of
Google’s effort to mine more revenue
from YouTube as the video site
approaches the 10th anniversary of
its inception. Music Key has been
speculated about for months while
Google Inc. wrangled over the
licensing terms with recording labels

The service, priced initially at $8 a
month, is comparable in cost to
other digital music subscription
services sold by Spotify, Apple Inc.’s
Beats and Google’s own 18-month-
old streaming service tied to its
Android “Play” store. But Music Key
subscribers will be able to stream
through the Google Play service at no
additional charge, too.

YouTube also is unveiling a new tab
devoted exclusively to music on its
mobile apps and website. This option
is meant to make it easier for the
video site’s 1 billion users to find
specific songs and entire albums,
even if they aren’t subscribers.
Most music subscription services own
the rights to the same catalogues,
making their ability to learn listeners’
preference to create appealing
playlists particularly important. Music
Key, though, will offer the unique
distinction of being able to show
artists performing their songs too.

That difference could help lure
listeners away from Spotify, which
says it has about 50 million users,
including 12.5 million subscribers,
said Mark Mulligan, a longtime
industry analyst with Midia Research.

And YouTube’s redesigned library of
free music could do even more
damage to Spotify and other services,
such as video site Vevo, where
people flock to check out songs at no
cost. Expanding the audience that
listens to free music would be
profitable for Google because that
would yield more opportunities to
show ads — the main way that the
Mountain View, California, company
makes its money anyway.

“A cynic might say that Google is
only doing this subscription service
on YouTube so it would get the rights
to do what it always wanted to do
with the free service,” Mulligan said.

Google’s main goal “is to make the
music experience better on YouTube,”
said Christophe Muller, who oversees
the company’s music partnerships.
Music Key initially will be offered on
an invitation-only basis in the U.S.,
United Kingdom, Spain, Portugal,
Italy, Ireland and Finland. The first
batch of offers will be sent out next
week to YouTube viewers with a
history of watching a lot of music
clips. Anyone interested in an
invitation can request one at http:// . After a free
six-month trial period, Music Key will
temporarily cost $8 per month before
escalating to its standard price of $10
per month.

Besides removing all ads, Music Key
also gives subscribers two other
perks: the ability to continue playing
songs while the screens of mobile
devices are locked and the option to
download tracks so they can be
played without an Internet
connection. The offline music can
only be played in Music Key’s mobile

Google Inc. bought YouTube for $
1.76 billion in 2006, a price that
some analysts questioned at the time
of the deal because the service
barely had any revenue and was
drowning in copyright complaints
about pirated clips of music videos,
television shows and movies. After
Google took over, YouTube set up a
more stringent system for blocking
pirated content to placate copyright
owners. Recording labels now use the
video site to help promote new songs
and artists. The ads running within
those music clips have generated
more than $1 billion for the
performers and recording labels,
according to Google.

The world’s three largest music labels
— Universal, Sony and Warner — all
have reached licensing deals with
YouTube as part of the new
subscription services. Hundreds of
independent labels, including some
that had been holding out for better
terms, also are on board. Financial
details haven’t been disclosed.

READ MORE Finally, YouTube rolls out Music Key paid subscription service Tech2 Mobile
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