YouTube's Music Key: Can paid streaming finally hook the masses?

Google's popular video site rolls out its long-teased contender in the paid streaming-music business. Called Music Key, it may have the best chance yet to popularize music subscriptions.

youtubemusickeybeta-googleplaymusicjpg.jpg
YouTube is already the Internet's biggest video site by audience and the dominant, legal source of music online. Google

YouTube hopes its next viral frenzy isn't a dance craze or a cute animal video but the very way you hear and pay for music.

Google's popular video site on Monday will roll out a pilot version of YouTube Music Key, a monthly subscription service that's priced at $10 a month. Members can watch music videos and listen to songs on YouTube without ads. It will also keep the tunes spinning on mobile devices even if the screen locks, listeners move to another app or the user has no Internet connection.

Though the addition of videos to a music subscription package is novel, what's most noteworthy about the launch of Music Key isn't the features it offers or the asking price: It's YouTube's sheer girth. YouTube is already the Internet's biggest video site by audience and the dominant, legal source of music online. It racks up more than a billion unique video visitors every month -- that's one out every seven people on the planet -- and it's the top place for discovering music after terrestrial radio and friend recommendations, according to researcher Nielsen. For young people in their teens through age 34, YouTube is No. 1 place for music discovery.

That means Music Key may have the best shot yet at popularizing subscription music services with a mainstream audience.

"The reach makes YouTube completely different," David Bakula, an analyst with Nielsen Entertainment said in an interview. More than two-thirds of people in the US listen to music online in a typical week, and of those people, YouTube is to No. 1 source for listening, based on Nielsen's yearly study of US music behavior.

Members invited to start using YouTube Music Key in the "beta" phase get six months free. After that, they'll pay a promotional price of $8 as long as they keep the service. (It will cost €8 and £8 at the discounted rate). More info about invites for the beta release, which YouTube said it's handing to its "biggest music fans first," is available at YouTube.com/MusicKey.

People who already subscribe or sign up for Google Play Music, which is a paid-subscription music service akin to Apple's Beats Music or the paid tier of the Spotify streaming music service, will be able to access Music Key too, and vice versa. Play Music, on its own, is $10 a month -- but now a subscription to either provides access to both without additional cost.

edsheeransearchframedjpg.jpg
In the next few days, nonpaying YouTube visitors will be able to listen to full albums via playlists. YouTube

YouTube also unveiled free music features, supported by advertising, that are available immediately to the public. The YouTube app for Google's Android and Apple's iOS and the YouTube.com site has a new corner just for music, which shows a user's favorite music videos, recommended music playlists and playlists of trending music across the site.

The track record in streaming music has shown that having a free tier as a springboard to get people to pay is key to winning members. Services like Apple's Beats have struggled to recruit users without one.

YouTube also said that in the next few days, nonpaying listeners will be able to see an artist's discography on YouTube and play a full album with both official music videos and high-quality songs. The site has added millions of songs as part of its deals with music labels, the company said.

While sales from streaming music are growing alongside declines in CDs and digital downloads, the subscription-streaming business is still relatively niche. Total revenue from all streaming services is almost equal to that of physical music items in the US, but only about 12 percent of US music revenue came from paid subscriptions in the first half of the year, according to the Recording Industry Association of America.

If YouTube can convert a small fraction of its visitors to a paid service, Music Key would quickly outrun rivals. Spotify, the world's most subscribed competitor in the space, has 50 million active users, or just 5 percent of YouTube's monthly visitor count. The Sweden-based company's 12.5 million paying members -- those who make it a true subscription service -- are even more minute: barely more than 1 percent of YouTube's regular audience.

youtubemusickeybeta-backgroundjpg.jpg
YouTube's subscription service sets itself apart from major rivals by marrying music videos with streaming songs. YouTube

But size doesn't win converts, a compelling product does. Spotify has spent seven years honing its offering, while Google has spent nearly two years simply trying to get its service built and out the door. YouTube offers video where no other major paid rival does, and already "people have turned YouTube into the biggest music service thanks to all the music videos, remixes, mashups, covers and more," said YouTube spokesman Matt McLernon.

Plus, the combination of Music Key and Google Play Music gives consumers a two-for-one deal, he added.

(That also means if you're having trouble scoring an invite to the Music Key beta, you can sign up for Play Music and get both.)

Music Key will be available in the US, the UK, Spain, Portugal, Italy, Ireland and Finland at first.

Google has reportedly been close to launching Music Key several times but has been hampered by reports of friction with independent music labels and the departures of key executives. Most recently, YouTube CEO Susan Wojcicki said at a conference that the company is "working on it" and that its subscription service should arrive

YouTube's rationale for launching Music Key as an invite-only beta release was to learn what people expect to have included, McLernon added. YouTube uploads 300 hours of video every minute overall, he said, so the company wants feedback from people who play the most music on YouTube.

Featured Video
Close
Drag