Video streaming giant, YouTube (YT), recently announced
their plan to launch a music subscription service similar to Spotify and
Rhapsody only with music videos. The recent decline in music downloads has led
to an explosion in the music streaming market. While many currently use YouTube
as an on demand video service, the new offerings will introduce new revenue
streams for YT and its music partners. The new service is likely feature entire
albums as opposed to videos for album singles only.
The biggest difference between the free on demand service
and the premium service will be the placement and use of advertisements. Paid
users will forgo the advertisements, which play before the start of videos.
[Read more here.]
In order for YT to start a premium streaming service, Google
(YT’s parent company) had to acquire the proper licenses from publishing
companies and music labels. Once the
service is launched, subscription fees will help to support continued licenses
and royalty fees. Among the first licenses acquired were those from Warner
Music Group and Sony Music Entertainment.
While YouTube’s plans for becoming subscription based are
welcomed in the industry, the partnership that has been dictated for
independent labels and partners is not. Unlike Spotify, Rdio and Rhapsody that
treat and pay independent labels in an equal manner to major labels, YT has
proposed a lesser pay rate for licenses from independent partners.
The proposed difference in pay has angered many independent
labels and publishers as well as raised questions regarding Google’s (YouTube’s
parent company) treatment of content owners’ rights. In response to those
concerns, Google claims to have paid more than $1 billion dollars in royalties
to content owners in the last few years.
In the event that independent labels and YouTube are unable
to find applicable terms of use for independent licenses, many independent
labels may opt out of the newest streaming service. Opting out of the service
will remove content from not only the premium tier of YT but also the free
service. This could mean many popular artists such as Adele, Taylor Swift,
Arctic Monkeys and Vampire Weekend will no longer have content featured on
YouTube. [Read more here
and here.]
