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YouTube plans to launch a new music streaming subscription service, internally dubbed “Remix,” in March 2018, Bloomberg reports.
The service, YouTube’s latest foray in the music streaming space, will include on-demand streaming capabilities, similar to Spotify’s, and offer video clips.
Warner Music Group, one of the world’s three largest record labels, has already signed a deal with YouTube for Remix. And YouTube is in talks with the other two major record labels — Sony Music Entertainment and Universal Music Group — as well as with independent labels, about procuring their music libraries for the service. Additionally, YouTube could structure royalties based on the licensing agreements other streaming services, like Spotify and Apple Music, have with the record labels.
A new music streaming service makes sense for YouTube for several reasons:
- It has a sizable user base to draw from. The site last reported having over 1.5 billion logged-in users on its platform in June 2017. This built-in user base can help Remix quickly catch up to music streaming leaders Spotify and Apple Music.
- YouTube’s music catalog is unique. YouTube has a ton of content — such as mainstream songs, cover songs, remixes, and old obscure songs — that other platforms like Spotify and Apple Music don’t. And, more than 400 hours of content are uploaded to YouTube every minute — this significantly helps the platform grow its catalog in a way other platforms can’t.
- Music is one of the most popular types of content on YouTube. Music videos account for 30% of all time spent on YouTube and represent 94% of the 250 most-viewed videos on the platform, per the VAB. This indicates that there’s a big base of devoted music listeners who YouTube could potentially convert into paying subscribers.
- YouTube will be able to strengthen its relationships with record labels. Some record labels believe YouTube doesn’t pay enough in fees for the music videos it hosts on its platform, according to The Guardian. A successful music streaming platform would generate additional royalties for record labels, appeasing those that feel monetization from YouTube streams is too low.
Nonetheless, the company’s planned music streaming service will have obstacles to overcome:
- Google could struggle to differentiate Remix from its existing music streaming services. The company already runs Google Play Music, an audio-only streaming service available on Android, iOS, and desktop. It also operates YouTube Music, a stand-alone app that features audio and music videos and can be accessed without ads through a YouTube Red subscription.
- Google is going up against established players with large subscriber bases. Google’s ad-free music streaming service, Google Play Music, hasn’t seen the same success as Spotify and Apple Music, for example. YouTube Red and Google Play Music have about 7 million subscribers combined, while Spotify and Apple Music have 60 million and 30 million, respectively.
- Users may opt to view music videos on YouTube for free instead. Given Google’s limited success at launching music streaming services, the competition it faces elsewhere, and the popularity of its free YouTube tier, the company might have a hard time convincing consumers to pay for its streaming service.
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