Google's YouTube described its new music-streaming service today, giving the internet company another tool to compete with Apple.
YouTube's ad-free Music Key will begin on an invite-only basis next week with a promotional subscription price of $7.99 per month -- discounted from $9.99, Google said today in a blog post. YouTube also is adding a music-focused tab that includes favorites and recommended playlists.
Google is investing in mobile entertainment options as it works to drive revenue beyond its search-engine business. There's already a crowded field: Apple agreed to pay $3 billion to buy headphones and streaming-music service Beats Electronics in May. Others include Pandora Media and Spotify.
"YouTube is in this business because they realize that Apple is about to get serious about subscription music and if Apple manages to turn people back to iTunes or Beats or whatever becomes of that combination, Apple will tie people even more completely to the iTunes digital platform," James McQuivey, an analyst with Forrester Research, said in an e-mail.
YouTube Music Key also includes a subscription to Google Play Music, the streaming service that its parent offers separately. Other features include new tools for listening and finding an artist's full album -- including songs that don't have videos associated with them.
Advertisers will not be able to target their ads specifically to the free, ad-supported videos that live within YouTube's new music tab, a YouTube spokesman said. The ads that will run against those videos will be the same as ads that run against normal YouTube videos. For the audio-only songs, a video ad will still play before a static image appears in the player while the song streams.
Compensation controversy
YouTube has signed up the big recording labels: Vivendi SA's Universal Music and EMI Group, Sony Corp.'s music business and Warner Music Group. There are also independent providers, the company said. Music-streaming services have sparked controversy among recording artists -- particularly with regards to compensation. The manager of British soul singer Adele recently proclaimed them the future of the music industry while others, such as Radiohead lead singer Thom Yorke, have complained about insufficient payments.
Singer Taylor Swift pulled her latest album, '1989,' and catalog from Spotify. The 24-year old described streaming, piracy and file sharing as reasons for the decline in album sales over the past several years in an opinion piece in the Wall Street Journal in July.
The new YouTube service will feature Ms. Swift, according to Matt McLernon, a spokesman for YouTube.
In June, YouTube said about 5% of the independent music labels Google works with haven't signed up to participate in the paid service. It is now less than 5% and the company is looking to get more of them signed, Mr. McLernon said.
~ Bloomberg News ~
