YouTube’s move to create its own streaming music service — despite a competitive product from its own company through Google Play Music — might not be as big of a headscratcher as one might at first think.
The company announced on Thursday it will launch YouTube Premium, which will not have ads, on May 22 for $9.99. It will also offer a free ad-supported music service called YouTube Music and YouTube Music Premium for $11.99 per month.
Google already competes in the streaming music market with Google Play Music and an older version of YouTube Music.
Here’s why this time the attempt might work.
YouTube’s viewers already use it for music in large numbers. That means it won’t face the challenges of getting users to think of it as a “music service.” They already do.
In fact, The International Federation of the Phonographic Industry said in September 2017 that 46 percent of all time spent listening to on-demand music is spent on YouTube. It also found 85 percent of YouTube users used the platform to stream music in the last month.
Many of YouTube’s popular videos are hosted by Vevo, a joint venture between Universal Music Group, Sony Music Entertainment and Warner Music Group. In 2017, Vevo racked up 300 billion views and increased its revenue to $650 million, according to the Financial Times. The $500 million dollar revenue increase in one year was mostly due to higher ad revenue fees from YouTube.
The company has been touting its music viewership numbers, especially as a way to prove it has brand-safe content to advertise on. During a recent advertiser presentation in New York, it announced it would allow companies to buy ads on any music content. The free YouTube Music service seems to fit in nicely with these plans.
Google’s parent company Alphabet, which includes YouTube as part of Google’s business unit, said it had a free cash flow of $4.34 billion during its latest quarterly report in April. That means there’s plenty of money for Google to experiment.
It also probably explains why Google has attempted this before, with existing products such as Google Play Music and the current YouTube Music app.
When the new services roll out it will offer the following products: YouTube, YouTube Premium, Google Play Music, YouTube Music, and YouTube Music Premium. Toss in its digital TV replacement YouTube TV and things get even more confusing for the everyday consumer.
Google needs to lay this out better for consumers. One strategy might be to kill Google Play Music. Then consumers will begin to realize that YouTube Music is the go-to Google service — and is the company’s answer to Spotify, Apple Music and Pandora.
Google has the foundation to succeed in the space, it just needs to clean up its messaging.
Source: Tech CNBC
YouTube's music ambitions might actually work this time