Video Kills the Rdio Star

YouTube’s Music Key Highlights the Importance of Video

YouTube_lYesterday, Google introduced a subscription-based music streaming service called YouTube Music Key. Subscribers can listen to music ad-free and download videos to their mobile devices for offline viewing for $10 per month. Google is highlighting the popularity of video with this service, challenging Amazon, Apple, Pandora and Spotify from a new angle. YouTube is also adding a special music tab for iOS and Android devices on its site. The service officially launches at the beginning of 2015, but users can subscribe early to a beta version of Music Key for an introductory price of $8 per month.

Google said it has signed licensing agreements with Sony, Universal, Warner, and with millions of artists and independent labels to offer audio-only tracks for songs without videos. YouTube is a vital platform for new talent. Music Key is being launched at a time when some artists are questioning the value of having their music listed on streaming services such as Spotify, but the promotional aspects of video should provide YouTube with a competitive advantage.

Music Key will certainly face some challenges, particularly as users have become accustomed to free music content on YouTube. A premium version could be a difficult sell. However, many users could find the mobile-optimized experience a key reason for subscribing.

Google purchased YouTube in 2006 for $1.65 billion, at the time considered a lot of money for a site that held user-generated content. It was a risky move for Google, but this year alone YouTube is expected to net Google more than $3 billion.

Advertising — and not content-subscription services — is Google’s bread and butter, so it will be intriguing to see how far YouTube can be developed as a medium for mainstream entertainment. In 2006, it’s likely that Google envisioned YouTube as the future of television as much as a platform for sharing homemade videos. It’s certainly going in that direction.