Fresh reports have suggested that YouTube, as well as Google Play, will both be launching a subscription-based music streaming service later this year.
The Google Play streaming service is said to be a digital locker for music downloaded on Google Play Music, as well as deliver music streamed in the cloud, but it will only be for Android devices. For the YouTube streaming service, anyone can use it, but like any other cloud music service, if it’s free, it comes with ads, or for a fee the ads simply go away.
Though Google declined to comment on the issue, a statement from the search giant points to the likely possibility of a streaming service in the near future.
“While we don’t comment on rumor or speculation, there are some content creators that think they would benefit from a subscription revenue stream in addition to ads, so we’re looking at that,” Google said in statement to Fortune.
In February, it was reported that Google is in negotiation with top record labels for music licensing to be used on its streaming service.
Is this the right time for streaming?
In a Nielsen “Music 360″ report from 2012, it showed that 64 percent of teeneagers prefer YouTube over listening to other music services and finding content. The main reason for this is because YouTube is free and you just need to deal with a 15-30-second ad before you can watch your desired video, plus the abundant array of wacky videos can keep anyone entertained for hours.
YouTube gets its revenue from ads, so launching a streaming service will be a huge opportunity. Even if users don’t subscribe and opt for the free streaming version, YouTube will still get money from ads. If people decide that they’ve had enough of ads and just want to listen to uninterrupted music, they pay a fee, YouTube gets richer. It’s a win-win situation.
Also, there’s a huge chance that people streaming music would use YouTube more to search for more videos, increasing engagement and revenue opportunities alike.
Still, there’s the burning fact that there are already a handful of popular cloud music services available to consumers such as Pandora, Spotify, SoundCloud and Rdio. Then there’s Google Play’s top rival Apple, which is rumored to be launching its own cloud music service. Several others are anxious to enter the market as well. Beats by Dre recently announced that it too will be launching a cloud music service named Daisy, securing a $60 million investment for the effort.
So is this really the right time for YouTube to enter the scene?
Why YouTube will succeed
Greater reach – If YouTube does launch the streaming service, it will probably go live first in the US, to test it and iron out the kinks. But because YouTube is known all over the world and millions of people access it everyday, expanding the service internationally will surely be part of the plan. This will be its edge over other cloud music services, which have limited reach.
Accustomed to ads – YouTube is ad-laced, that’s no secret. And its streaming service will most likely be abundant with ads as well. But YouTube users are already accustomed to seeing ads before getting to their videos, so that won’t be a problem.
Licensed music – YouTube has been in business since 2005 and it has secured licenses from various record labels so consumers can have access to the music videos for free. Though it has its ups and downs and rifts with record labels, and some artists asking for music videos to be taken down, it has managed to comply with the demands and keep people happy. Securing licenses for a streaming service won’t be such a big deal given Google’s improving relationships with traditional media companies.