Rumor Mill: YouTube subscription music platform launching this year
Google's (NASDAQ:GOOG) YouTube unit reportedly plans to launch a streaming music subscription service later this year, complementing and in some cases overlapping with Google's previously rumored streaming radio effort optimized for mobile devices.
Citing sources inside Google and music business sources with knowledge of the situation, Fortune reports that YouTube executives are in talks with record labels to roll out a multi-platform service offering both free, ad-supported streaming music access as well as a subscription-based, ad-free option. Google currently monetizes YouTube by selling ads against music videos, awarding a cut of revenues to its label partners.
A YouTube spokesperson said "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."
The report follows roughly a week after publications including The Wall Street Journal and Bloomberg revealed Google is also in talks with labels to license their catalogs for a separate mobile music service slated to go live as soon as the third quarter of 2013. While the effort is intended to boost the consumer appeal of Google's Android mobile operating system, giving Android device owners expanded access to entertainment on the go, services are expected to roll out to non-Android smartphones and tablets as well.
It is unclear exactly how the two Google-backed music services would co-exist, but Fortune notes YouTube has already started embedding click-to-buy links on user-uploaded songs that direct to the Google Play digital media storefront as well as Apple's (NASDAQ:AAPL) iTunes and Amazon (NASDAQ:AMZN) MP3, perhaps foreshadowing Google's plans. "It's not difficult to imagine a user's 'collection' becoming jointly visible between the two platforms, or having music purchases or listening histories from one feed informing the recommendation engine of the other," the report states.
The streaming media services would complement the cloud-based Google Music initiative, initially introduced in 2011, which automatically scans and syncs each user's existing digital music library for streaming across all their connected devices. Consumers can also purchase individual songs or complete albums via the Web or any Android device, with all premium content instantly added to their Google Music library. The addition of premium streaming music solutions would also help Google remain competitive with archrival Apple (NASDAQ:AAPL), which reportedly is designing its own digital music service, and challenge standalone digital music providers like Spotify, Pandora and Rhapsody.
The YouTube service could additionally boost the sagging fortunes of the music industry. Most of the site's top-viewed clips are music videos, and a Nielsen "Music 360" report from 2012 states that 64 percent of teenagers prefer YouTube over any other music listening and discovery engine.
- read this Fortune article
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