YouTube is introducing a $10-a-month music-streaming service, a strategic concession to record labels that analysts say could struggle to find an audience.
The new YouTube Music, rebranded as part of a shake-up of YouTube Red, will charge users a monthly fee to watch ad-free music videos. To differentiate itself from the leading music-streaming apps, YouTube is playing up its exclusive content and personalized recommendations. The service will also recommend music based on a user's listening history and location.
Users will also be able to cue up music without knowing a song's name by searching for things like "that hipster song with the whistling" or song lyrics, although users of ad-supported YouTube can do that as well.
YouTube has drawn billions of users by becoming the destination for listening to music without paying for it, as long as they can tolerate ads. Music is one of its most popular categories.
YouTube has been at odds with the music industry for years, said Rob Sanderson, an analyst at MKM Partners. Music labels have pressed streaming companies for a greater share of revenue and more ways for listeners to pay for music. But YouTube has not seen much success selling subscriptions, Sanderson said, even though it is the biggest potential threat to industry leader Spotify.
YouTube does not disclose how many people pay for YouTube Red, its premium service. (YouTube Red’s original video content will now be called YouTube Premium and will cost $12 a month.) According to Mark Mulligan, a music technology analyst with Midia Research, about 5 million people are subscribers, with another 5 million paying for Google Play Music.
"YouTube is unlikely to become the leading music subscription service soon, but there is no denying that it has clearly upped its game," Mulligan said in a blog post Thursday.
In an interview at Recode’s Code Media conference, YouTube chief executive Susan Wojcicki offered clues as to why the company chose to split its premium content and rebrand its premium service. "YouTube Red is a service that is really a music service," she said, adding that exclusive shows are added on top of that service.
By separating its music and premium video services, YouTube may be attempting to boost its brand as a music streamer, as an essential service that can displace competitors. "The days of jumping back and forth between multiple music apps and YouTube are over," the company said in its announcement.
Music-streaming companies have long had strained relations with music labels, facing accusations that they don't fairly compensate artists for their creative work and for encouraging audiences to pilfer music. But in recent years, subscription services have positioned their businesses as vital contributors to the music industry's resurgence, by convincing millions of listeners to pay for on-demand music.
It's unclear, however, how YouTube can cut through a crowded field. YouTube's latest push into paid music streaming faces stiff competition from rivals that already command massive audiences. Spotify leads the music-streaming industry with 75 million paying subscribers, and Apple Music is quickly gaining steam. Apple chief executive Tim Cook said during a recent interview on Bloomberg TV that the service now has 50 million users, combining paying subscribers and people on free trials. YouTube Music is also charging just as much as Spotify and Apple Music, $9.99.
Users in the U.S., Australia, New Zealand, Mexico and South Korea can start listening to YouTube Music starting early next week. The service will roll out in Canada and more than a dozen countries in Europe in the coming weeks.