Youtube is reportedly planning to launch a paid music streaming service that would compete directly with Spotify (SPOTIFY) and Apple Music, and go a long way toward appeasing record executives who complain the site takes too big a bite of their revenues.
According to Bloomberg, which cites unnamed sources familiar with the matter, YouTube’s paid service is slated to roll out next March and Warner Music Group is already onboard. Two other industry giants — Sony Music Entertainment and Universal Music Group — as well as Merlin (MIINF), a consortium of independent labels, are reportedly in talks to sign up.
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More than 1 billion users visit YouTube each month and music industry executives say the service does not pay enough to compensate them for the loss in revenues. But royalties garnered from a paid on-demand service in line with that of Spotify’s (AAPL) could turn out to be a boon for record labels.
Before paid streaming, both major and independent labels had been in virtual free fall since the emergence of peer-to-peer services, starting with Napster in 1999. Now, on the back of the success of Spotify and Apple, they are beginning to recover.
YouTube’s holding company Alphabet will hope its new service — which Bloomberg says is internally referred to as Remix — fares better than its past attempts to convince users to pay for music.
Neither 2011’s audio-only Google Play Music, nor 2014’s YouTube Music Key — which became YouTube Red in 2016 — approached the subscription levels of Spotify. The latter was eventually repositioned as a home for original video projects.