YouTube to Launch New Subscription Service

Youtube plans to introduce a paid music service in March, according to the people familiar with the matter, a third attempt by parent company Alphabet Inc. to catch up with its rivals Spotify and Apple Inc.

Record label Warner Music Group has already signed on while Sony Music Entertainment, Universal Music Group, and Merlin, a group of independent labels, are in talks with the video streaming website.

The new service is due to arrive in March 2018 and is currently being referred to as Remix, which would include on-demand streaming and incorporate video clips and other elements from YouTube.

Paid services from Spotify and Apple Music have been able to recover in the music business, which is growing again after almost two decades of decline. However, major record labels say that the growth would be even more significant if not for YouTube, which they criticize for not making them up enough, considering how many people use the site to listen to tunes. Music is one the most popular genres of video on YouTube, which attracts more than a billion users a month.

YouTube’s ad-generated payouts have been a source of contempt in the music industry, with many people complaining the website undermines gains made by streaming services’ paid subscription models that have been essential in its recent revenue growth.

Google’s own attempts at creating successful subscription services have struggled to take off in the past years.

The video streaming website hasn’t had the same success as Apple or Spotify in convincing people to sign up for its paid music services, though it’s not for lack of trying. Google introduced audio-only streaming service Google Play Music in 2011. YouTube Music Key came along in 2014, giving subscribers ad-free music videos. That changed into YouTube Red in 2016, which let the users watch any video without advertising.

Those two services were combined earlier this year under the direction of music executive Lyor Choen, who joined YouTube last fall as the company’s global head of music, and count about 5 million paying subscribers combined.

YouTube must get over several hurdles to meet a March target. Not only hasn’t it been trying to negotiate a new deal with Universal and Sony for more than a year, but it also has a negotiation with Vevo looming early next year. Vevo, owned by Universal and Sony, distributes music videos for the acts.

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