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 free.
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 one billion users to find specific songs and entire albums, even if they aren't subscribers.
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, which is the main source of income for Mountain View, the California based company.
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. Anyone interested in an invitation can request one at http://YouTube.com/MusicKey. 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.
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.