YouTube has become one of the favourite places for teens to watch or just listen to streaming music on the internet. Observers think that this happened more by luck than by any long term planning or design by Google management. The company is now preparing to try and milk some cash out of that popularity by launching a subscription music service that will probably offer to cut out the advertising - for a fee.
Fortune magazine has been briefed about Google’s plans for making money with two new Spotify rivalling services, one for its own Android OS users and the one for other platforms. Google Play for Android currently offers a store where users buy tracks but it will be augmented with a streaming service. YouTube’s new music streaming service should be available for any other platform with YouTube access via the web or an App. Fortune informs us that “Both services are said to be adding a subscription fee that will unlock additional features. For the YouTube-based service, this will likely mean ad-free access.”
Companies currently make a lot more money selling digital purchases rather than “renting out” music via the subscription model. People still prefer to own things outright. Amazon and Apple make a lot more money by selling digital media that that made from subscription based streaming companies. However Google has the huge success of its free YouTube streaming already, with a massive audience, it just faces the task of getting a portion of those users to pay for an enhanced service.
Record companies are warming to YouTube’s business model as partnerships, getting a share of advertising revenue for the world’s most popular online video sharing site, have become lucrative. Fortune says that Warner Music Group “received about 25% of its digital revenue from streaming last year, according to its quarterly reports”. That’s a big boost to corporate income for signing on the dotted line and sitting back waiting for a cheque. People could just watch the music videos for free somewhere else if YouTube didn’t host them.
If anyone can make a paid subscription streaming service work successfully and profitably it should be Google with YouTube...