Technology

YouTube Music Key Looks To Further Monetize User-Created Content

| by Will Hagle

In terms of the way music is consumed, paid for and regulated online, YouTube has long been an anomaly. While services such as Spotify and Rdio compete for paid subscribers by working with labels to make official albums and singles available via ad-supported services, YouTube has remained a limitless wasteland of mp3s, user-recorded videos, remixes and other forms of content. There is official content, but it is vastly outnumbered by more amateur songs and covers. The copyright teams at major labels can be quick to remove the unapproved use of certain songs from videos, but it has always been likely that a newer version would pop up on the service soon thereafter. As the site itself proclaims, "If a song exists in this world, you can probably find it on YouTube."

With the announcement of Music Key, YouTube's freedoms may soon give way to the more appealing factor of monetization. Similar to the aforementioned Spotify and Rdio, YouTube Music Key is a subscription-based music service. Users can pay $7.99/month to start (before prices are raised to $9.99/month) for an ad-free version of the service. The free version has the same features, such as background listening, the ability to save songs, a more intuitive search engine, and a dedicated home and app for all of the site’s musical content. It's essentially an extension and acknowledgment of YouTube's existing music services as well as a way to organize it all in one centralized, easy-to-navigate location. 

In unveiling the new service, YouTube spokesperson Matt McLernon told Techcrunch that YouTube differentiates itself from other sites and apps in that its users don’t always follow the traditional definition of music.

“The thing that makes YouTube so unique in the music space is, not only is there the traditional music side that everyone knows and loves, but with 300 hours of music and video coming to YouTube every minute, and much of that being music, there’s this whole spectrum of what people call music, or consider music, or share as music," said McLernon. More specifically, he's talking about user-uploaded covers of popular songs, parodies and live versions of songs, although the new service will also have the option to listen to full albums and more “official” songs and releases. 

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Music can play any role and take on essentially any form on YouTube, and the new service acknowledges that. Yet that’s the way the service has been existing for years, largely without advertisements or the requirement to pay for an ad-free experience. With Music Key, YouTube appears to be cashing in on the fact that it’s essentially been the dominating force in the lucrative online music streaming business. Apple acquired Beats for $3 billion this year, so it's no wonder Google wants to get in on the action more than just with its more traditional Google Play Music service.

A major question in the battle for music streaming supremacy has been the treatment of its artists. As of now, YouTube Music Key appears to be the most cutting-edge in that regard, as no other service acknowledges the power of user-created content. Soundcloud is the closest example, but that company’s recent financial troubles — a $29 million loss in revenue in 2013 — have forced it to move toward ads and other revenue-generating options and away from the creator community that it was when it began. But YouTube has always been supportive of its artists, allowing them to post whatever content they create and assisting them in the monetization of successful songs and videos. The new service could be a step in the opposite direction; an attempt to make money off subscription fees from the very artists that fuel the site’s massive library of content. 

The artists in that scenario, however, are a far cry from the superstars who have found fault with services like Spotify. Taylor Swift is currently in a widely publicized dispute against the Swedish streaming giant, as she recently pulled her albums from the Spotify library. Spotify CEO Daniel Ek responded with a blog post claiming Swift was on pace to make $6 million in streaming royalties, while Scott Borchetta, the CEO of Swift’s record label, Big Machine, alleges they’ve made only $496,044 to date for domestic streams of the artist’s music. Others have lobbed similar criticisms at Spotify for exploiting artists without proper payment. Elk maintains they've paid more than $2 billion to labels and publishers since 2008. 

Conversely, YouTube has already established a more positive reputation for supporting the artists whose songs and videos are uploaded to the site in an official manner. According to a statement earlier this year by Tom Pickett, VP, YouTube Content for Google, the company has paid more than $1 billion to the music industry “over the last several years.” It's a similar number to Spotify and a similarly vague way of disclosing it. The company has, however, remained discreet as to how much songwriters and copyright holders actually make from hosting songs on the platform. According to Rolling Stone, it’s somewhere in the 60 cents to $2 range for every 1,000 views. That’s a relatively small sum compared to what artists used to make from album sales, but it makes sense considering the changed nature of the industry. 

YouTube Music Key could be perceived as yet another threat to established artists as well as a form of exploitation towards those who use the service to distribute their unique forms of creative content. Unless it remains more committed to artist rights than Spotify appears to be, the new service may come under the same criticisms of unfairly profiting off the work of others.

Yet the reality of the new music industry is undeniable. Nielsen reports that more than 118 billion songs were streamed in 2013, 32 percent more than in 2012 and the equivalent of 59 million album sales. If there is any money to be made from music, streaming services are, at least for now, the way to go. In terms of content creation, if users are threatened by YouTube’s new service, they’ll undoubtedly find some place else to continue making and sharing music.