Report: YouTube's Paid Music Service Launching Soon

Joining The Streaming Crowd

Confirming earlier reports (NET NEWS, 3/6), YOUTUBE will soon unveil a paid music video subscription service that will compete with outlets such as PANDORA and SPOTIFY, the NEW YORK TIMES reports. The launch is expected by the end of the year, perhaps as early as next month.

Subscriptions, costing $10 a month, will be tailored to mobile devices and give users advertising-free access to YOUTUBE’s mammoth catalog of music videos. Sources also indicate the service will also let customers temporarily store videos on their smartphones and tablets to watch offline.

YOUTUBE wouldn't directly confirm the report, only stating: "We’re always working on new and better ways for people to enjoy YOUTUBE content across all screens, and on giving partners more opportunities to reach their fans. However, we have nothing to announce at this time."

The new service would alleviate friction between YOUTUBE and the major labels in that while 40% of YOUTUBE’s traffic is mobile, its lower advertising rates on tablets and smartphones have prompted some music labels to block their content from those devices.The subscription deals enable YouTube would get the licenses it needs to stream music to any device. In exchange, record labels and music publishers would earn higher royalty rates.

The subscription deals would not only cover artists’ official music videos, but user-generated content that incorporates commercially released music, such as wedding videos with a popular song playing in the background. Record companies would also be able to handle what's described as "the chaos of content" on YOUTUBE by organizing music in full albums and playlists. That would be a help promote artists on the service.

Earlier this year, YOUTUBE's parent company, GOOGLE, introduced another SPOTIFY-like subscription service, GOOGLE PLAY MUSIC All Access. It is believed that All Access subscribers, who pay $10 a month, would get access to the new YOUTUBE service free.

There are still some sticking points to resolve. Reportedly, YOUTUBE signed agreements with the three major record companies -- UNIVERSAL, SONY and WMG -- but little is known about deals with independent labels.

Smaller labels have frequently complained that past licensing deals with digital services favored the conglomerates on benefits such as advance payments, which were rarely available to the indies. The terms of YOUTUBE’s licensing deals were not known, but sources indicate that some independents still refused to sign licenses because of those financial advantages.

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