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Music Key may be part of wider YouTube subscription service

By Chris Cooke | Published on Monday 28 September 2015

Could YouTube’s long-in-development subscription music service go properly live not as a standalone proposition, but as part of a wider subscription package offered by the video site? Rumours to that effect have been doing the rounds for a while now, and tech site Re/code added fuel to that fire with a report this weekend.

As previously reported, YouTube’s move into paid-for music streaming has been a very long time coming, the company finally putting what it calls Music Key into beta last November, after a run in with the indies over how the service would be licensed.

It’s widely thought that the Music Key project was, in part, a bid to placate the labels and publishers, which have become increasingly tetchy about the preferential royalty rates the Google video site enjoys. Rights owners insisted that the freemium YouTube site, a low earner for the music business, should be upselling to something more in line with the other music streaming services that have become decent earners for the industry at large.

Though YouTube has been dabbling with going the subscription rather than ad-funded route elsewhere on its network. And now Re/code reckons that new terms for content owners, being instigated by the video site, are the Google service getting ready to offer its viewers the option to go ad-free in return for a $10 a month subscription. Content owners have been told they must sign up to the new terms by 22 Oct to continue monetising their videos, in the US at least.

That timeline suggests that YouTube could be offering ad-free viewing from late October or early November, which would fit in with the latest implied dates for Music Key properly going live. And Re/code’s sources are saying that that’s because these are now the same proposition, ie that there will be just one YouTube subscription product that will give users ad-free videos and the Music Key audio-streaming platform.

Though if that whole package is just $10 a month, which insiders seem to say it will be, that raises new questions about how the music side of the proposition will be licensed. The labels wanted YouTube to launch something akin to Spotify et al, so $10 a month, with about 70% of the revenue going to music rights owners.

Presumably under the wider YouTube subscription offer, the Google site would have to share royalties with other content owners whose videos are consumed without ads. Though YouTube might argue that this way there’ll be many more users, and therefore much more revenue to share.

For its part, YouTube remains non-committal as to what it has planned subscriptions-wise, and as to when Music Key and any wider subscription offer will actually go live. A spokesman merely told Re/code that “we are progressing according to plan to provide fans more options in how they enjoy content on YouTube”.

Though with the 22 Oct deadline on the new terms for content owners, maybe we’ll hear more about what is launching in the weeks that follow.