Article written by Ben Sisario.
The competitive world of digital music is about to become even more crowded with the arrival of one of the most formidable forces on the Internet: YouTube.
By the end of the year, YouTube, a division of Google, will unveil a paid subscription music service to compete with Spotify and other streaming outlets, according to people briefed on the company’s plans.
Subscriptions to YouTube’s program, at about $10 a month, would be tailored to mobile devices, and let its customers watch videos — or just listen to the music on them — without interruptions from advertising, according to these people, who were not authorized to discuss the service publicly.
The deal would also allow record companies, which have long complained about low per-stream payouts, to reap bigger royalties on YouTube, which has become the dominant listening platform for young people all over the world.
YouTube declined to comment directly on its plans, but said in a statement: “We’re always working on new and better ways for people to enjoy YouTube content across all screens, and on giving partners more opportunities to reach their fans. However, we have nothing to announce at this time.”
The news of the imminent arrival of the service, which has been rumored in the music industry for months, was first reported by Billboard.
The service would solve problems for both YouTube and the music industry.
Mobile access to the site has skyrocketed — Google recently announced that 40 percent of YouTube’s traffic is mobile, compared with 6 percent just two years ago — but lower advertising rates on tablets and smartphones have caused some music labels to block their content from those devices.
Through the deal, YouTube would gain the licenses it needs, covering artists’ official videos as well as user-generated content like wedding videos with a popular song in the background.
In addition to higher payouts, the service could also help music companies tame somewhat the chaos of content on YouTube by organizing music in full albums and playlists.
YouTube has struck licensing deals for the service with Sony, Universal and Warner, the three major record label groups, as well as some independent labels, according to people involved with the talks.
YouTube is only the latest arrival in a crowded market. In addition to Rdio, Rhapsody and Spotify, similar subscription streaming services are offered by Sony and even Google itself — its Google Play Music All Access, developed and operated separately from YouTube, was introduced in May, also for $10 a month.
The music industry is also eagerly awaiting Beats Music, a subscription service expected soon from the makers of Beats by Dr. Dre headphones. Music executives are hoping that the company’s success in marketing $300 headphones can translate into music subscriptions, which have been slow to take hold, partly because of all the free music easily available on YouTube and elsewhere.
Some analysts said YouTube’s success with a paid product may depend on its ability to compete with services like Spotify while still attracting users with free videos.
“YouTube is the world’s largest music search and discovery engine,” said Richard Greenfield, a media analyst at BTIG Research. “Clearly there are people who would pay above and beyond using YouTube for free. It’s just about making a great consumer experience.”
