YouTube's music streaming service could launch this year


  • TECH
  • Thursday, 13 Nov 2014

LATE TO THE PARTY: YouTube's struggles in negotiate licensing deals with a number of smaller labels appear to be over as it finally jumps on the music streaming bandwagon.

A report in the Financial Times claims that the video-sharing platform has finally made peace with indie music labels. 

YouTube has been trying to join the music streaming party for most of this year but has been struggling to negotiate licencing deals with a number of smaller labels. 

However, it would appear that an agreement is now in place with Merlin, a trade group that represents most of the world's biggest independent labels, including XL — the home of Adele, Jack White and Radiohead among others — meaning that the service could go live in a matter of weeks. 

YouTube's service is expected to offer online and offline access to playlists and to let listeners select music videos as well as audio tracks. It is also widely tipped to have a two-tier service — a premium, subscription version and a basic no-frills ad-supported ‘free' version. 

Streaming services and the future of music access and ownership have been grabbing headlines in recent weeks thanks to US singer Taylor Swift. She decided to pull her entire catalogue from Spotify in protest over what she sees as an erosion of artistic value by making music essentially ‘free' unlike other art forms. 

But consumers' appetite for streaming is growing and it looks like it's only a matter of time before services like Spotify and Deezer completely overtake physical or digital paid-for ownership of singles and albums. 

According to Kobalt Music Publishing, which collects fees in Europe on behalf of almost 6,000 songwriters, including ex-Beatle Paul McCartney, during the first quarter of 2014, its artists earned 13% more from Spotify then they did from paid-for iTunes downloads. 

As recently as the third quarter of 2013, iTunes was delivering royalty payments that were 32% higher than those of Spotify but it has only taken six months for the tables to turn — 10% of all publishing income for Kobalt's clients is now generated by streaming services. 

Likewise, in order to defend itself from Swift's accusations, Spotify's CEO took to the company's blog to reveal the service has already surpassed the 12.5-million paid subscriber mark and that the milestone has been achieved by offering the free tier that a host of musicians, including Radiohead's Thom Yorke as well as Swift, have been highly critical of. 

"Our free service drives our paid service. Today we have more than 50 million active users of whom 12.5 million are subscribers each paying US$120 (RM400) per year. That's three times more than the average paying music consumer spent in the past. 

"What's more, the majority of these paying users are under the age of 27, fans who grew up with piracy and never expected to pay for music. But here's the key fact: more than 80% of our subscribers started as free users. If you take away only one thing, it should be this: No free, no paid, no two billion dollars," he wrote. 

The explosion in the popularity of streaming services is what motivated Apple to acquire Beats. The iPhone maker is currently working to integrate the Beats Music streaming service into iTunes and the rebranded service is expected to go live in early 2015. 

However, digital downloads aren't dead just yet. Speaking this week at the SF Music Tech Summit, an event attended by TechCrunch, Google's vice-president of global music partnerships Zehavah Levine claimed that although the popularity of its music streaming service — Access All Areas — is on the rise, so too are paid-for downloads. 

And based on the data, she believes that the market and demand are still great enough for downloading and streaming to exist side by side for some time to come. 

"We launched our store a year and a half before our subscription service. If you look at our subscribers who all came after our store, more of our subscribers buy music after becoming a subscriber than stopped buying music after becoming a subscriber. We're not seeing cannabilisation... We're going to be in a world that supports both access and ownership for many years. There is room for both models," she said.  

As for YouTube's streaming service, although it's finally managed to secure rights to some of the world's biggest indie label artists, there's no word as to whether or not Taylor Swift's catalogue will be available when the service launches. — AFP/Relaxnews 2014

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