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The new version of YouTube's app allows users to view full albums and artist discographies Google

YouTube Launching Spotify-Style Paid Music Service

Nov 12, 2014

YouTube, the most popular online destination for music, is launching a revamped free music listening experience and a paid music service that will compete directly with Spotify and the Apple-owned Beats Music.

For its free offering, Google-owned YouTube will on Wednesday begin offering full albums and even complete discographies for many artists through a new Music tab on its website and mobile apps. The company has signed licensing agreements with major U.S. labels and hundreds of independent labels to offer audio-only tracks for millions of songs that don’t already have official music videos on YouTube. YouTube spokesman Matt McLernon said the size of the library would be on par with Google’s other streaming music service, Google Play Music, which has more than 30 million songs.

“This is the first time we’ve ever made a home just for one certain type of video on YouTube,” McLernon says.

YouTube's new paid service, meanwhile, will be called YouTube Music Key, a $9.99-per-month service that functions similarly to Spotify or Beats Music, letting users listen to songs without ads, play songs on their devices while using other apps and download videos to their phones for offline viewing.

A YouTube Music Key subscription will include access to Google Play Music, and the two services will track users’ listening habits together to offer up better recommendations on both platforms. An invite-only beta version of YouTube Music Key will be available to some of YouTube’s top music listeners on Monday, Nov. 17. Beta users will get the service free for six months, then pay a lifetime promotional price of $7.99 per month. The service will see a full launch sometime in 2015.

McLernon would not disclose the bitrate of YouTube's new streaming services, but said it would be the same for the paid and free options.

By rolling out a paid streaming service in 2015, YouTube is late to enter a crowded market that already features Spotify, which just disclosed that it has 12.5 million paying customers, and Beats Music, which Apple is rumored to be planning to integrate into its iTunes music software. But YouTube has a key differentiating factor—its content. The website is popular not only for official music videos from artists but also for the myriad covers, parodies, remixes and original songs recorded by lesser known musicians. These types of songs and videos will also be available ad-free on the paid service, giving that platform a library that will likely exceed all others on the market in terms of raw amount of music. McLernon said these unofficial songs not covered by agreements with record labels will be added on a case-by-case basis for now, but the company hopes to eventually automate the process in the same way that users can currently sell ads against their videos with the click of a button.

YouTube's new paid service is the biggest endorsement yet of the paid streaming model as a viable revenue stream for the music industry. YouTube has mostly been viewed as a promotional tool by artists in the past — the video site has paid out more than one billion in ad revenue in its lifetime, but that’s a relatively paltry figure given YouTube's massive scale. (Spotify has paid $2 billion to the music industry with just 50 million users.) YouTube's paid tier could present an opportunity for artists to earn significant revenue from the platform if customers adopt it. With more than 1 billion monthly users, YouTube will have a massive pool of customers to which it can sell music, but it’s not clear how many of them will be willing to pay for music on a site that's always been free. The company’s last big foray into paid content, charging users a monthly subscription fee, was initially met with a muted response, though it's since been expanded to include more channels.

YouTube's many new features are rolling out for iOS, Android, and YouTube.com. And at least a portion of Taylor Swift's catalogue, which was completely removed from Spotify, will be available on YouTube Music Key and Google Play Music.

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