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Tuesday, December 23, 2014

'Free' to 'Music Key', YouTube sets trend


Written by Ben Sisario

On November 12, YouTube unveiled YouTube Music Key, a long-awaited upgrade of its music offerings that will include higher-quality audio for most songs and give users the option of paying $8 a month for extra features, chief among them removing YouTube's ubiquitous ads.

With its new service, YouTube hopes to reform its reputation in the music industry as a phenomenal free site to promote songs, but one that pays a pittance in royalties. "We want to give fans more ways to enjoy music on YouTube, but also give artistes more opportunities to connect with fans and earn more revenues," said Christophe Muller, its music partnerships director.

As YouTube pushes into paid content, other online music outlets – under considerable pressure from the recording industry – are being forced to defend or change their business models to better compensate artistes.

Taylor Swift drew wide support among fellow musicians – and a rebuke from Spotify's chief executive – after she removed her entire catalogue from the streaming service, apparently because Spotify refused a request to keep her music only on its paid level. And SoundCloud, which has never paid royalties, signed its first deal with a major record company, the Warner Music Group, last week, and will begin to pay artistes for the first time.

With the music industry suffering a steep decline in sales, it is ever more dependent on payouts from streaming outlets like Spotify, Pandora and Apple's Beats Music. For a while, free music has been crucial to the marketing of these services, but now music executives and analysts increasingly say that their growing popularity is a deterrent to getting customers to pay. "As recently as five years ago, free was entirely about piracy; now free is widespread and completely within the legitimate sphere," Mark Mulligan, an analyst, said. "But we still have the exact same challenge we had in the golden age of piracy, which is, how do you compete with free?"

Online subscription services like Spotify have grown quickly, with 28 million subscribers around the world last year, according to the International Federation of the Phonographic Industry. In some countries, like Sweden, a majority of sales revenue now comes from streaming music. But so far this growth has not been fast enough to make up for a rapid decline in sales of CDs and downloads. In the first half of 2014, for example, album sales were down 13 per cent compared with the same period the year before, and digital track downloads were down 10.6 per cent, according to the Recording Industry Association of America.



YouTube Music Key will be available to users in the United States, Britain and a handful of other European countries. Following Google's preferred pattern of introducing new products through "beta" testing, it will first be available by invitation only, and is expected to be offered to all users by next year.

For those invitees, it will be free for six months and then cost $8 a month; the cost to the public starting next year will be $10, the same as Spotify and other services. Subscribers will also get Google Play Music, the on-demand audio service that has been Google's main competitor to Spotify.

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