Even with built-in audience, rumored YouTube music service faces hurdles

googleplay and youtube
Credit: Android Police

What’s in a name? That’s the question streaming experts are debating, following this week’s revelations that Google was planning to launch a subscription music service on YouTube called Music Key.

Monday’s report from Android Police contends that the $10-a-month service will feature ad-free music, audio-only playback, and offline playback. Under the plan detailed by Android Police, Google Play Music All Access would also undergo a rebranding, re-emerging as Google Play Music Key.

Of course, it’s a long way from rumor to fact, and there’s no set launch date for YouTube Music Key—not surprising since Google would have to iron out arrangements with music rights holders. But what YouTube Music Key’s chances of making a splash in an area where the likes of Pandora, Spotify, Rdio, Rhapsody, and the Apple-owned Beats Music are already competing for eardrums?

Excellent, replies UK streaming analyst James Cridland. What already gives YouTube the edge is not whatever features it may offer when Music Key launches, but the ubiquity that YouTube already enjoys among younger users. “YouTube has beaten its competition,” Cridland said. “Resoundingly. Already.”

Cridland bases that conclusion on a recent 2,023-person telephone survey conducted by Edison Research, which found that YouTube is already the preferred destination for American online music listeners age 12 and older. One-third of those surveyed already watch music videos or listen to music on the site.

“While radio has spent much of the last year focusing on Pandora and Sirius XM, YouTube remains a major destination for many formats’ P1 listeners,” says Edison Research vice president of music and programming Sean Ross. (P1 refers to the format each respondent listens to the most.) “In fact, nearly as many Top 40 P1s use YouTube for music in a week as the 60 percent that use Pandora in a given month.”

That’s right: Nearly as many Americans are using YouTube for music right now—whether it’s watching or listening—as are using Pandora in a month for audio only. That’s the concept of “brand advantage” in action.

Technalysis Research has seen YouTube deliver similarly impressive results. In measuring the top weekly activities of 2,500 people worldwide, the firm found that watching TV came first, listening to music came third, and watching YouTube videos came sixth. “Imagine the power of uniting music listening with YouTube,” said Technalysis Research founder and chief analyst Bob O’Donnell. “Even if YouTube only has a share of the market, it would be massive.”

That gives YouTube Music Key the necessary brand to displace its streaming media competition. “YouTube’s brand equity in the music usage and discovery space right now gives it a substantial edge over other music services,” said Fred Jacobs, president of the radio/streaming consulting firm Jacobs Media. “Especially among Gens Y and Z, YouTube is already a very popular go-to source for discovering new music and new artists. A companion streaming music service would enhance an already well-formed relationship, and the video piece is another plus.”

Of course, that relationship has been built on the fact that much of YouTube’s current content is freely available. With YouTube Music Key expected to cost $10 a month, the new service would have to convince would-be subscribers that what it’s offering is worth the money. And YouTube would have some work to do here.

“I must confess to not being entirely clear what extra I’d get with a YouTube Music Key subscription,” Cridland said. “Much of what I get is commercial-free anyway on most of my devices. So what am I paying $9.99 for? The opportunity to download for offline use? Handy in London’s Tube, not so much elsewhere.”

Indeed, several apps already exist—at least on Android—that provide much of what the rumors about YouTube Music Key are promising.

YouTube would have another challenge converting its young core audience into Music Key subscribers, Cridland adds: “YouTube’s main audience so far is young—teens and early-twenties. They don’t pay for much online, because they’ve not got the cash to do so.”

Technalysis’s O’Donnell is similarly skeptical. “Although YouTube is already using a freemium model—its amateur-made content is free, but professionally produced content is not—I am not sure that their brand would be enough to convince their core audience to pay $9.99 a month,” he said. “They could find themselves with a concept that is popular in theory, not in commercial practice.”

It remains to be seen what Google’s next move is: Launch the service as described in leaks to Android Police? Tweak the concept before it sees the light of day? One thing is certain: The fact that the terms “YouTube” and “free” are inexorably linked in the public’s mind makes it difficult for YouTube to launch any kind of mass-market premium service.

This story, "Even with built-in audience, rumored YouTube music service faces hurdles" was originally published by TechHive.

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