YouTube’s ‘Spotify Killer’ Subscription Service Will be Live by Christmas…

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YouTube is already demoing the service to critical partners, with one confidential presentation happening in London last month.  And what they’re showing is this: a fully-baked, monthly subscription service that revolves around higher-quality music videos, and promises to create serious problems for every streaming music competitor.  “Spotify will have a serious problem once this is launched,” one executive assured Digital Music News, relaying details from the London demonstration.

“They will have a very, very serious problem.”

For now, YouTube is staying extremely tight-lipped on the release.  At the recent SF MusicTech Summit in San Francisco on October 1st, YouTube head of Strategic Partnerships Isaac Bess flatly denied having any knowledge of the upcoming YouTube Music, despite extremely direct (and multiple) questions from Digital Music News.

Launch by Christmas

That sort of evasion is going to get more difficult.  According to a separate source, YouTube Music is planning to go live by Christmas, if all goes according to plan.  That aggressive timetable would create instant problems for leading streaming services like Spotify, Rdio, and Rhapsody, and could beat the now-lagging Beats Music entirely.

‘Cleaning Up the Chaos’

In terms of the top-level vision for this release, another source with knowledge of the plans pointed to a release that will ‘remove the general chaos’ of YouTube’s current music offering (but not eliminate it, see below).

That is, if you want to call YouTube’s music smorgasbord an ‘offering’ at all: currently, users are forced to sift through endless uploads and ‘MCN’ channels looking for their favorite music, or grab an ad-choked VEVO stream.  Playlists work well on YouTube, except that you can’t take them anywhere (for the most part).

In terms of available catalog, results are often spotty, incomplete, and almost always have differing sound quality levels.  The actual videos are typically a mix of images or actual videos, with random-and-sudden takedowns depending on the content owner.

YouTube Music: Top-Level Features & Costs.

All of that would be cleaned up with this release, according to the second executive.  At a top-level, YouTube will be focusing on all-you-can-eat premium, higher-end videos at a very aggressive monthly cost, potentially in the ‘single dollar digits’ (we have little information on pricing, however.)  Here are some of the other, top-level aspects of this release:

Complete, millions-plus catalog of videos, similar to Spotify but with videos.

Easily-accessible, pre-assembled albums, curated playlists, and histories.

Offline cacheing to mobile devices and tablets (unconfirmed for launch).

Perfectly-synched playlists, histories, and accounts across 3+ multiple devices.

Ad-free enjoyment.

HD-quality videos of consistent quality.

‘Video as a layer’: Audio-only listening will remain an easy option (and possible a lower-bandwidth solution on devices in a future release).  On a laptop or desktop, videos are easily subsumed into a stack of browser tabs.

Integration into broader Google Play suite of services (unconfirmed for launch).

Pre-licensed security against sudden DMCA takedowns.

Simple, more elegant search results, without endless multiples of the same songs and karaoke covers.

Easily-access viewing histories and recommendations based on previous activity.

Licensing Question Marks.

YouTube and its Google parent appear to be in the final stages of licensing YouTube Music with all three majors.  We do not have information on publishers or indie labels at this moment.

The Role of VEVO.

A huge, dangling question in all of this relates to the role of VEVO going forward.  After all, VEVO specializes in higher-quality – and quality-controlled – videos and experiences, with joint venture major label backing.  But whether VEVO will be integrated into the upcoming release remains totally uncertain, especially since VEVO’s model largely revolves around higher-end advertising, which would be eliminated by the premium YouTube Music offering.

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‘Devastating Impact’ for Spotify, Beats, Rhapsody, Deezer, Pandora, Muve Music, Rdio, et. al.

According to executives who have seen the product, YouTube Music ‘bears strong resemblance to Spotify’ in the sense that ‘all the content is there, just [as] videos instead of straight

streams.”  That, coupled with cacheing portability and multi-device synchronization, means that the entire streaming music space now faces a very, very perilous competitor.  At present, YouTube’s music traffic alone utterly dwarfs all streaming competitors, including Pandora, and the plan is to keep that ‘chaotic,’ unpredictable, and ‘ad-heavy’ experience intact.

And why not?  It offers the perfect up-sell opportunity for more serious music fans, most of whom have little room for a second subscription service.

YouTube/Google’s Tendency Towards Mediocrity

This could be the biggest x-factor: Google’s (and YouTube’s) repeated tendency to launch an ill-supported, mediocre product (with massive media attention).  The splashy, earth-shattering product then basically disappears six months later.

Let’s see.


53 Responses

  1. GGG

    So we have no royalty information, and it’s entirely possible the payouts will be no better, possibly even still less, than Spotify, but because some insider called it a “Spotify killer” it gets a positive DMN spin? This is great.

    For the record, if it does make more for artists than Spotify, then I’m all for it. Just thought this was funny.

    • Anonymous

      “it’s entirely possible the payouts will be no better, possibly even still less, than Spotify”

      Yes, but it’s also possible that YouTube’s total payout will be significantly better than Spotiy’s — though YouTube’s click-through rate may be lower — simply because of YouTube’s size.

      On the other hand, the quality difference between free and paid channels will have to be huge in order for this to work. And that fact will lead to a serious transition problem that could be dangerous to YouTube:

      Many right holders, who currently make their catalogues available on free but monetized channels, will likely move to the subscription service. And I’m not talking about HD material only.

      This will instantly damage YouTube’s hard earned image as the best, free jukebox on the web. And the real problem is that this damage will occur before the new Spotify/Netflix-killer image is in place.

      Which means there’ll be a limbo, a power vacuum, and whenever there is a power vacuum, somebody will try to fill.

      Might be the right time for Apple to move, for instance. They could still buy Google…

      • GGG

        Sure, so then why not just have both? People who want commercial free, HD music videos can pay for YouTube and people that don’t and probably wouldn’t pay to begin with can stick to free YouTube and/or Spotify.

        • Anonymous

          why not just have both?

          I can only answer for myself, but I love simplicity and I would deeply appreciate a less fragmented market.

          So I guess I hope YouTube will go all the way, get a gargantuan deal with as many parties as possible and destroy everything except iTunes. Not because I like Google, which I don’t, but because I’m tired of this chaos and all these tiny penny rivers that don’t do anybody but the majors any good.

          • GGG

            I agree with you in theory but would it not make sense to have some net catching crumbs? Even if this YouTube service exploded and 100M signed up for a premium account, that’s still a lot of people in the world not paying. So why not have a comparable (sort of, since this and Spotify are still pretty different) free service for all the freeloaders? I mean, if I’m as optimistic as possible I think the generation of people that see premium streaming as normal are maybe just being born now. In other words, it will be years before people look at Spotify or this or whatever service and just pay for it because it’s what you do. Right now, too many people are too used to free.

    • hippydog

      Quote ” but because some insider called it a “Spotify killer” it gets a positive DMN spin? This is great.”

      Its kinda big deal, and i wouldnt call it a true positive spin, I also agree on the last part

      Quote “Google’s (and YouTube’s) repeated tendency to launch an ill-supported, mediocre product (with massive media attention). The splashy, earth-shattering product then basically disappears six months later.”

      is totally true.. Google has done this multiple times.. Which I think makes a lot of people leery about jumping into new stuff with these guys..

      • GGG

        Oh, I agree. I’m by no means trashing the endeavor or idea of it. I just found it funny because the service could literally be no better that Spotify.

  2. Casey

    All the content is there… just as videos instead of straight streams…. That might be true if every song ever written was made into a music video. Relatively few have.

    This is going to fail, just like every paid venture Youtube has ever tried. One of the biggest reasons this time is probably data costs. Mobile phones are where the music subscriptions are gaining ground. Mobile data is extremely expensive and music videos use a lot of data. So you can store music videos offline? That’s great. You can store a tiny fraction of the music you can store with Spotify/Rdio/Rhapsody.

    Another reason is cost. You can already watch a huge selection of videos on Youtube, probably more than this service will offer because of the vast amount of unlicensed content on Youtube. So why pay? You can already get an ad free experience with adblock.

    • David

      In my experience, the vast majority of songs are on YouTube in some form or other. Only a tiny minority of these are in the form of official music videos. The rest usually have only rudimentary visuals: lyrics of the song, pictures of the artist or the original record cover, etc. As an example, here is a very obscure David Bowie track that I think has only officially been released as a ‘B side’ on a CD single:

      It isn’t clear if the new streaming service will be confined to existing official videos. If it is, the catalog would be very small compared to Spotify, etc. But if labels and artists find the royalty proposals attractive, it would be easy enough to churn out basic ‘videos’ like the Bowie one. Incidentally, I noticed that that one runs with an ad, so presumably Bowie or the relevant label have monetised it through Content ID.

    • hippydog

      I was wondering about that myself (bandwidth usage) but if they did have the option to have both

      Quote “‘Video as a layer’: Audio-only listening will remain an easy option (and possible a lower-bandwidth solution on devices in a future release). “

      That would solve the bandwidth issue, and make it multi-purpose..

    • hippydog

      quote”All the content is there… just as videos instead of straight streams…. That might be true if every song ever written was made into a music video. Relatively few have.”

      Umm.. You have used youtube before right?
      search for any song on youtube.. most likely someone uploaded the song with just a static picture (IE: fake video)

  3. Anonymous

    “users are forced to sift through endless uploads and ‘MCN’ channels looking for their favorite music”

    Well, I use YouTube a lot for music, and the ‘best’ video almost always seem to be among the top 4-5 results. YouTube is already the perfect jukebox for millions of people.

    As for differing sound quality levels: That’s mostly a problem for older recording, and the situation is rapidly improving as more and more right holders upload their own authorized versions.

    Same for takedowns: Remember the scenario 2-3 years ago? Songs disappeared overnight all the time. I almost sympatized with people who downloaded the material illegally, as much of it actually was unavailable from other sources. But there’s no need for that anymore since most videos are there to stay, thanks to monetization.

    But when that is said, yes, this may indeed change everything.

    If and when the difference between free and paid channels exceeds a certain — and probably rather high — threshold it could not only kill all other music services (except iTunes).

    It could also kill Netflix and similar services.

    • GGG

      Still think it’s hilarious you are cool with YouTube because the principle of numbers is greater than a shitty payout, yet for Spotify the principal of numbers, in this case potential numbers, is something that shouldn’t even be considered even if it’s less shitty payouts.

      • Anonymous

        See my other reply to your message above…

        But, honestly, which one of these two hypothetical scenarios would you prefer?

        1) To be paid one million dollars for ten billion plays, or
        2) To be paid one thousand dollars for one million plays?

        • GGG

          Obviously the former but that is not a remotely reasonable scenario at this point. I’m also arguing the idea that Spotify can grow (assuming they start marketing themselves more effectively). A more reasonable scenario would be, what’s better 100M plays for $100K or 60M plays for two-three times that, at minimum.

        • tuneHunter

          Non of the above! Both payout rates are acts of ignorance and desperation.

          I think first billion streams tune will go shortly to Mr. Bieber on Veevoo – 1/10 of a penny would make exactly one million dollars!
          I hope Google will deliver just that to all involved including Mr. Bieber.

          I am afraid that the numbers are closer to Big Machine recent alarm sound which skips two decimal points and suggests just $10,000 pay out for the biggest event inside of the BIGGEST CLOUD BASED iPod on Earth.

          Last and most important: All, including music loving kid in Haiti, would pay ONE CENT to listen to tune he loves.
          Better he would pay it each time he goes back to that tune – no matter how destitute he is.

          If so, Mr. Bieber billion streams tune activity is worth $10 million dollars! At the same time just “legal” traffic on YouTube, Spotify, Pandora, iTunes Radio etc converts to billions of dollars in annual sales – at penny a stream!

      • David

        I haven’t seen any reliable figures for YouTube’s average payout per play, though I have seen a figure quoted of over $6 per thousand for the cost of ‘pre-roll ads’, which comes to 0.6 cents per play, of which the rights-holders get about half. If you know of any better data I’d be interested.

        In principle YouTube ought to be able to pay a higher amount than Spotify’s ad-supported streams, because on average YouTube probably has more advertising revenue per song. (I’m assuming the cost of running the services per play is similar.) A fully-monetized track on YT could have a ‘pre-roll’ video ad playing before the song, one or more pop-up ads showing on screen during the song, a ‘framing’ ad around the edges of the screen (when not in full-screen mode), and several sidebar ads. Whereas Spotify only has one audio ad every few plays.

        As far as I know, the only musician who has published data on revenue from both Spotify and YouTube is (inevitably) Zoe Keating, who in fact made three times as much from YT as from Spotify. She explained that the YT revenue was largely from videos using her music which had been identified and monetized through Content ID.

        • GGG

          Until you hit levels where you can get preroll ads, from things I’ve heard/seen it’s about a tenth of a cent per play. The most legit thing I’ve based this off of is some friends who have about 25M+ views over their videos and it’s avg out to about $1K/M views.

          But yes, you (and Visitor/Anonymous) are correct that there are more ways to get paid via YouTube. So it’s better in that sense of volume, but the principle is still the same. At worst you should want both, not get rid of either. Plus, volume isn’t a given. Zoe has music many people enjoy immensely. But how many other bands have music stuck in videos that rack of views? A small percentage. So it’s not like you get rid of Spotify and all of a sudden every video will hit 1M plays. I just don’t think YT and audio streaming should be treated/looked at as the same thing.

        • hippydog

          Also keep in mind , Google has a huge advertising base that is already being heavily used by most business’s..

          IE: unlike apple and spotify, etc etc
          that might actually be able to run an ad-based service and do it successfully, simply because they have the existing ‘infrastructure’ to do so..

  4. jw

    Love that it could have a “devastating impact” on Pandora… pretty much everyone but iTunes Radio. Always playing favorites.

    So analysts are predicting that iTunes Radio will thrive because they secured “more favorable” licensing agreements for their catalog (i.e. they pay artists less), but DMN gets behind it. Youtube pays out worst of anyone. And they launch a streaming service, & they get this fluff piece? I really don’t understand where DMN is coming from most of the time.

    Ultimately, the YouTube crowd just doesn’t want to pay. And for the site to survive on ad revenue, it’s going to have to undercut Spotify, Rdio, etc on payments to artists & songwriters. There’s just no two ways about it. This scenario, widespread ad-supported streaming, isn’t the one to root for, imo.

    • Student

      … but the newspiece says that this new service will be subscription-based? That is, it won’t be ad-supported at all, with only a hypothetical free version with ads I suppose. Isn’t that just the same as Spotify? Besides, Youtube could hypothetically pay more based on volume; I mean, it currently does have more ads than Spotify per song, so I’d suppose it pays relatively better.

  5. TuneHunter

    Not only Spotify, they all will have problem!
    Streaming or iRadio subscriptions at $7.49 avg. with 250 million users (Good luck!) will bring only 22.5 billion dollars!

    Not even half of inflation adjusted 1999.

    If this blind rat race will continue they will get there in 2020.
    With 250MM on the rope do not count for any other sources of income – including iTunes or Amazon.
    It is overdue to start sale music at the discovery moment. Simple and easy way to gat cash for tunes.

    • tuneHunter

      You talking the article or the comments?

      Inflation adjusted we have shrank to 1/3 of the 1999. We need turbo propaganda to stop blind walk in to the forest fire! Normal communication with labels and RIAA does not exist. The egos are still stronger than urge to save the burning house.

      • jw

        Turbo propaganda… Gotta hand it to you, you really know how to articulately classify your comments.

  6. Call me when you have concrete evidence

    Isn’t it a little silly to be using this “YouTube is the Spotify killer” headline just as people are being forced to back-pedal on last month’s premature “iRadio is the Pandora killer” claims? What are you guys a tabloid? Oh, never mind.

  7. R.P.

    There is now way I am buying this cow when I’ve been drinking its milk since it was born..

    Nothing to see here ladies & gentlemen. Keep moving.

    • tuneHunter

      Are you personal assistant of Mr. Ek? Yes, keep moving, you will have to, free state of the art is unsustainable!

  8. Anonymous

    Here’s how YouTube may screw up before they even start — at least what independent artists are concerned:

    According to Billboard, Google’s new licenses with the majors are for both Google All Access and for ‘a YouTube service’.

    While I’d be very interested in a YouTube subscription service, there’s no way I’d consider to sign up with their All Access audio streaming service. And I’m sure I’m not alone here.

    Artists who stay away from Spotify will obviously also stay away from All Access, and for the same reasons.

  9. Edward Jennings

    Yet another “speculative” article greatly exaggerating the death of Spotify and BeatsAudio (which hasn’t even launched yet, you dummies). So let me see if there’s any “integrity” to this article. Hmmm, writing about an unannounced video service that is going to make BeatsAudio DOA is preposterous.

    Spotify killer…oh that’s right you put that in your headline so that people will read what you wrote.

    Throws this article on the pile of other “you were wrong about Spotify” Web articles I have read.

  10. Edward Jennings

    One last comment, your article would have better served readers if you did an apples to apples comparison. A future YouTube “video” music service should be directly compared with other video music services.

    Your article takes aim at audio services, so what was written here was an apples to oranges comparison.

    • Paul Resnikoff

      You do realize that a very substantial portion, if not a large majority, of YouTube music videos are only listened to, and not watched? Music does not require dedicated attention like film or games; therefore, music videos are often recessed in a Chrome tab somewhere, while the user does something else.

      Sorry, you were saying something about apples and oranges…?

      • Yves Villeneuve

        Hi Paul, do you have stats to back that up? So far I don’t believe dedicated audio listeners will transition to videos of expensive productions or still-shots. I certainly won’t be encouraging video subscriptions that promises low payouts to stakeholders and waste of bandwidth that serves to line the pockets of ISPs and any investments Google has or intends to make in ISPs.

        • GGG

          I’ve looked for stats in the past and haven’t found any (doesn’t mean they aren’t out there somewhere), however if you’ve ever been to a party, gathering, hang-out, ice-cream social, etc where people used YouTube to queue up music you’d know it’s a pretty substantial percentage.

          • jw

            I’ve never been to a party where music was queued up on YouTube. That happens? I feel like that’s something my mom or niece might do. And neither of those are in the subscription demographic.

            I feel like, as little as YouTube actually pays out to artists, they’re profitable because they don’t have to pay royalties on a huge percentage of their videos. With a service that’s music-only where they have to pay out on every play, all of the sudden you have huge overhead, so the likelihood of payouts being any better than standard YouTube is unlikely without something to subsidize the streaming, & I don’t see the Play store gaining significant traction.

            This whole thing sounds like another Xbox Music to me.

          • GGG

            Well, to clarify, by queued up I don’t mean a playlist ready to go. I just mean the “Hey, let me show you this song!” or “let’s put on some Artist XYZ” or “have you heard this song yet” etc. Plenty of people do watch them, especially if pulling up a specific video, so I’m not trying argue like 90% of people walk away. My argument is that the percentage of views of music videos (both actual videos and lyric/art) is pretty substantial. Really, the fact that so many videos of one picture get so many views is proof of YouTube’s use as an audio jukebox.

      • GGG

        It still all depends on how they set it up, what they make available, etc. In other words, will they make so there is even a point for people to choose the YouTube service for audio-only? Are labels going to, or going to have to, make a lyric video for every single track on the album? Will there be pre-set playlists so you don’t have to find each video through related links, searches, etc? Will load time/buffering be better? How much does loading videos for every song on this drain your battery on a mobile device compared to an audio only platform? There’s a place in the world for both a video-centric and audio-centric platform.

      • Edward Jennings

        What I realize is that I watch and hear YouTube videos, it is a visual and audio COMBINED experience. (Apple)

        I listen ONLY to Spotify. (Orange)

        • tuneHunter

          Most of the Tube traffic goes as “listen only” mode”.
          All teenage parties are powered by free mega TubePod!
          Video and display advertising around it goes unnoticed in 80% of cases.

          Free or near free is not the future! There is absolutely no reason to give you total pleasure for free!
          Labels are ignorant and lost at someones expense – it is time for musicians of any caliber to unite and say LOUD NO!

      • Frank

        Your anti Spotify rhetoric is tiring… your articles are not ‘Digital Music News’ but skewed rants with bits of ‘news’ to suit your agenda. Stick to news or change the name of the site!

        • Anonymous

          DMN’s ‘agenda’ is actually all over the place:

          From Helienne who defends musicians against criminals, to Nina who protects criminals against artists.

          And somewhere in between you have Paul. 🙂

    • Edward Jennings

      Thanks for this article reference. The author, Steve Knopper did his homework. he also correlated his writing with direct references from key industry personnel. He wasn’t speculative nor sensationalist.

      I like this quote, “But a source familiar with the service clarifies what the service will not be. “It’s not putting a paywall in front of music. That would just not be cool on many levels,” the source says. “And it’s not Spotify-plus-video.”

      Read more:
      Follow us: @rollingstone on Twitter | RollingStone on Facebook

      • GGG

        “It’s not putting a paywall in front of music. That would just not be cool on many levels,” And this is the service DMN wants? Putting a paywall (or rather the last decade tearing it down) in front of music is the whole issue!

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