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Inside YouTube's New Subscription Music Streaming Service

Inside YouTube's New Subscription Music Streaming Service

(Billboard)

After years of false starts and months of rumors, YouTube's new subscription music streaming service -- aptly titled YouTube Music -- has finally arrived. Announced last week, the YouTube Music Premium service, priced at $9.99/month, will deliver ad-free access to all the licensed music and user-generated music content available on YouTube, while the new-look YouTube Red (now re-christened simply YouTube Premium) will expand those offerings to all YouTube content for $11.99/month.

Though YouTube is best known as the world's biggest video hub, its new premium music service focuses on audio-only tracks like its competitors Spotify and Apple Music do, surfacing music videos only in a certain section of the app.

So what does YouTube's re-entry into the subscription streaming game mean for users? For one, the deep-pocketed player already has plenty of data and listening history on many of its 1.8 billion monthly users with which to generate a taste profile for its algorithms. Two, it promises an end to the confusing era of YouTube's twin services, the aforementioned YouTube Red and Google Play Music, which will eventually be folded in to YouTube Music Premium but will exist for the next few months until all its functions can be integrated into the new service. (In the meantime, Google Play Music users can access YouTube Music Premium for free.)

Today (May 22), YouTube Music rolls out in the U.S., Mexico, South Korea, Australia and New Zealand, with Canada and several European nations expected to be included in a further 14 countries in which the service will become available shortly. And with significant resources and marketing behind the rollout, YouTube Music may also help assuage the "value gap" discontent between the company and the music industry that has bubbled below -- and sometimes above -- the surface for the past several years.

"I think aside from the fact that we heard the industry -- and that the industry wants not only that people are prepared to pay with their eyeballs, but that also those that are willing to pay a subscription [fee] -- that us coming in means the consumers get a choice," Lyor Cohen, YouTube's global head of music, told Billboard in an interview this month. "I think if we have diversity in distribution, the value will creep back to the artists and labels. When you look at most mature media businesses, they have advertising and subscription [models]. So we're just thrilled to be here."

Getting here, as it were, took YouTube the better part of 14 months of experimentation, product development and strategic planning, both internally and with industry partners that have in the past not looked favorably upon the service. YouTube has also rolled out several new initiatives ahead of the subscription product launch, including expanded charts, the addition of production and writing credits, the consolidation of related content into singular artist channels and the expansion of its Artist on the Rise program, all of which arrived in the first few months of 2018.

"About a year ago, we merged the music teams at Google, and YouTube Music and Google Play Music came together," T. Jay Fowler, YouTube's head of music products, told Billboard. "As a group, we spent a good deal of time thinking about the music industry and the music space in particular. The music app space is getting really good: everybody's innovating so quickly and creating so many really great consumer experiences. So we spent a good deal of time trying to figure out, where should we be?"

That's an important question, particularly as YouTube comes relatively late to the game, though the company's primary source of revenue remains the advertising on its free tier. Spotify, which launched in the U.S. in 2011, has more than 71 million subscribers worldwide and 160 million monthly users of its paid and free tiers, while Apple Music, with 50 million global subscribers, is gaining steam quickly. YouTube, whose previous efforts in the paid subscription world garnered fewer than 10 million subscribers combined, according to one source, has a massive global audience for its video content. But for YouTube Music, it's emphasizing premium audio, rather than video, to reassure users that when tossing on a YouTube Music playlist they won't get interrupted by the video version of, for example, Cam'ron's "Hey Ma" instead of the album version. (It's been 16 years, and Juelz Santana can get into clubs without a fake ID now.)

And the service has considered who, precisely, it will be catering to in the subscription streaming marketplace. "We found there are a lot of people on YouTube who love music but who find it hard to listen to and discover new music; they're under-served by what's going on, they characterize it as too much work, streaming services have too much choice," Fowler said, emphasizing that on its home screen, YouTube Music will be totally personalized to users' taste profiles, listening habits and preferences to offer as much of a "lean back" experience as possible. "So our product tenet is, it's all here. We have video, we have licensed audio, we have shared cultural moments, we have Saturday Night Live performances. We have playlists, albums and tracks, but we also have video. We know what time of day it is, what the weather is, we have some sense of pattern. It's really adapting to what you're doing on a daily basis."

One of the service's most promising new features is called My Mixtape, a collection of music pulled from repeat listens, favorite artists and new recommendations that is automatically downloaded onto a user's phone and can be listened to offline, on a plane or in a subway, for instance. And recommendations will be adjusted for time of day, location (work vs. home) and other variables, offering more options for videos at home, for example, or audio playlists while at work. And regular YouTube users who have made playlists or saved videos will be able to access those, too, and can transition from video to audio or vice versa with a quick tap of a button.

"You're seeing other players in the space being innovative and bringing new people to streaming, and I think there's a large opportunity still there," Fowler said. "If you look at penetration numbers in European countries, for example, they're still pretty low for an overall population. There are markets that are still overwhelmingly physical that are becoming ripe in the not-too-distant future, and as I mentioned we identified a pretty large user base on YouTube that feels under-served, or intimidated, by what's in the market today. We feel we'll be a decent competitor in the market place."

Still, YouTube Music remains very much a work in progress, even beyond the full integration of Google Play Music. Fowler and Cohen both stressed that many of the features are first steps -- "We're experimenting; you can imagine My Video Mixtape and things like that," Fowler said -- and that new additions and functionalities, such as better integrating UGC search results, are forthcoming. "We're certainly not done by any means," Fowler added.






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