Be Very, Very Afraid of YouTube’s Subscription Launch…

It’s really easy to forget how utterly dominant YouTube is, in music streaming alone.

streamingbreakdown

That’s a breakdown, based on music views and listens, conducted by Digital Music News last summer.  Seems wildly lopsided, yet somehow, even industry people forget amidst all the hyper-coverage surrounding Spotify, Pandora, and even Deezer.  “Does everyone know that YouTube is the number one place in the world for music?” Linkin Park manager Jordan Berliant reminded an audience at Musexpo this week.  “It’s the number one place in the world.”

Not everyone knew.  But YouTube is 100 times as large, with 1,000 times the budget as its nearest competitors.  YouTube doesn’t need VCs; Goldman Sachs isn’t trying to flip YouTube Music in three years.

There’s another big advantage: YouTube didn’t really have to pay for the content to get this huge, thanks to friendly DMCA workarounds.  And now, YouTube is starting to learn how to convert that mass of users into paying customers.

All of which brings us to the latest news, which is that YouTube will soon be launching some paid-only, premium channels.  The Financial Times says monthly access will start at $1.99, though it’s largely unclear what that buys.  But we do know that YouTube’s volume-based, ad-supported experiment isn’t working out.

hand-left The Things I’d Gladly Pay for On YouTube…

All which means we’re getting even closer to the rumored ‘YouTube Music,’ a subscription-based music play that will undoubtedly take cues from other premium YouTube experiments.  And YouTube will be trying to convert the largest music audience in the world with something slightly better, at a better price, and with better selection than any other music service in the world.

hand-left Financial Firm Rates Spotify as ‘Unsustainable,’ ‘Alarming,’ ‘Broken…’

Meanwhile, on-demand streaming services (Spotify, Deezer, Rhapsody, Rdio, etc.) are already shaky financial bets.  They have limited runways, outlandish content costs, difficult subscriber acquisition costs, and lots of pressure to IPO or flip.

The financials hardly make sense, and there isn’t room for everyone.  YouTube will accelerate the shakeup.

Be very, very afraid.

Written while listening to Jeremy Loops (on YouTube).

26 Responses

  1. Visitor
    Visitor

    “Be Very, Very Afraid”
    Yes, if you’re Spotify or Deezer.
    But again:
    This could be very, very good news for artists!
    Google is the world’s leading piracy search engine today — but why would Eric Schmidt continue to send his customers to Pirate Bay and mp3skull, if he can earn more by routing his traffic to YouTube?
    This could kill Pirate Bay as well as Spotify…

    Reply
    • Roger Bixley
      Roger Bixley

      This could kill Pirate Bay? Are you mental? Until YouTube starts showing porn and movies that are still in the cinemas, Pirate Bay isn’t going anywhere.

      Reply
      • Visitor
        Visitor

        “This could kill Pirate Bay?”
        Pirate Bay will die in an instant without Google’s support. At least as a major Piracy Industry player.
        “Until YouTube starts showing porn and movies that are still in the cinemas, Pirate Bay isn’t going anywhere.”
        You sure you read Paul’s story?
        Forget about porn, but showing movies that are still in the cinemas could very well be next.
        It could in fact be the entire purpose of this exercise…

        Reply
    • Casey
      Casey

      Youtube is a video sharing website. I highly doubt this will even have much to do with music and more to do with Google’s ultimate goal of becoming an original content provider.

      Reply
  2. Conspiracy Freak
    Conspiracy Freak

    I am sure to spotify, deezer, rhapsody etc. it does sound scary…at first, then they can console themselves with the thought that youtube is going to experience the exasperation of trying to get people to pay anything for music.

    Reply
  3. Visitor
    Visitor

    “Be Very, Very Afraid”
    Yes, if you’re Spotify or Deezer.
    But again:
    This could be very, very good news for artists!
    Google is the world’s leading piracy search engine today — but why would Eric Schmidt continue to send his customers to Pirate Bay and mp3skull, if he can earn more by routing his traffic to YouTube?
    This could kill Pirate Bay as well as Spotify…

    Reply
    • Paul Resnikoff
      Paul Resnikoff

      Apparently he isn’t signed, doesn’t have an agent, etc. Just saw him play live at SIR Studios in Hollywood over the weekend (part of Musexpo’s showcases)… pretty good.

      Reply
  4. Casey
    Casey

    People can already get nearly all the music they want on Youtube for free. This merely puts a price tag on it. I don’t see any way this will even make a dent in Spotify, Deezer, Rhapsody, or Rdio which offer a much better experience for music.

    Reply
    • Central Scrutinizer
      Central Scrutinizer

      I can see a way that they could make a better music experience. They combine the official music product with UGC (like live shows TV appearences, goofy dance routines etc.) offering more variety of product for consumers. That is just one example. I am sure the app developers and number crunchers at youtube have plenty more ideas.
      That being said I don’t think Spotify, Deezer etc. have much to worry about because I think Google/youTube will have about as much succes as Spotify has had at converting free users to paying customers.

      Reply
    • Paul Resnikoff
      Paul Resnikoff

      There’s something you may not be considering. Yes, YouTube is dominant is music… with an awful user experience! It’s clunky, there are ads, Spotify is light years ahead in terms of ease-of-playlisting and portability.
      Cacheing… what? YouTube demands a Wifi-rich environment or it’s not happening.
      I’d pay for all that selection, with a Spotify/Rdio/Rhapsody style usability experience and real portability.

      Reply
      • HansH
        HansH

        You are right Paul. Spotify has a way better user experience.
        So Spotify doesn’t need to be afraid. Then why the title “Be afraid, be very afraid…”?

        Reply
        • Central Scrutinizer
          Central Scrutinizer

          Spotify’s user experience is not unique and certainly not impossible to duplicate or improve.
          About how long do you think it will take youtube web and app developers to duplicate spotify’s user interface?
          I think it would take about two days a week at most.
          So yes, spotify does need to worry quite a bit.

          Reply
          • Casey
            Casey

            You are still assuming Youtube is going to launch a music service. Youtube has made it quite clear this is going to be offering channels. As in video content. Not music. Youtube is still primarily a video website.

      • hippydog
        hippydog

        Quote Paul “Cacheing… what? YouTube demands a Wifi-rich environment or it’s not happening. ”
        Not entirely true anymore..
        The android youtube app now allows you to cache videos in your subscriptions or “watch later” lists..
        doesnt seem to ‘actually’ work, but it looks like they are moving towards having it working..

        Reply
      • Visitor
        Visitor

        “Spotify, Deezer, Rhapsody, or Rdio which offer a much better experience for music”
        You think music videos without videos are much better?
        Billions of users disagree…

        Reply
  5. FarePlay
    FarePlay

    “Meanwhile, on-demand streaming services (Spotify, Deezer, Rhapsody, Rdio, etc.) are already shaky financial bets. They have limited runways, outlandish content costs, difficult subscriber acquisition costs, and lots of pressure to IPO or flip.’
    “Outlandish Content Costs?”
    Paul, do I detect a bit of sarcasm here? Or are you speaking comparatively?

    Reply
  6. Pinky Gonzales
    Pinky Gonzales

    Am I the only one that remembers that Google just bought Spotify for $4.2 billion? Not only is there no pressure for an IPO, there is direct incentive for Google to steer Youtube TOWARD Spotify, and vice versa. What am I missing?
    As for Deezer, Rhapsody, Rdio… yea, they’re toast, but that has nothing to do with YouTube and everything to do with the cost of streaming music online without a legion of additional revenue streams to offset the costs.

    Reply
  7. Look at the data again
    Look at the data again

    All Google sites (incl. YouTube) streamed 977 million hours of video in Jan, 909 million hours in Feb, and 1.02 billion hours in March. (see, comScore Video Metrics, Jan, Feb, March).
    Pandora streamed 1.39 billion hours in Jan., 1.38 billion hours in Feb, and 1.49 billion hours in March. (Pandora’s SEC filings).
    Even if all of YouTube’s plays were music, Pandora is still bigger than YouTube.

    Reply

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