Google will launch a streaming music service later this year to compete with Spotify.
Fortune is reporting that the search media giant is taking advantage of YouTube’s strong position as the leading source of streaming video to launch a new subscription music service. Both a negotiating and operations team have been set up to prepare for launch.
If you know a teenager, you probably know how important YouTube already is to the music business.
In February, Billboard began factoring YouTube plays into its formula for the Billboard Hot 100 singles chart after “Harlem Shake” videos began to rack up millions of views. According to the New York Times, Billboard’s editor said they had been considering adding YouTube to the chart for two years:
“The notion that a song has to sell in order to be a hit feels a little two or three years ago to me,” Mr. Werde said. “The music business today — much to its credit — has started to learn that there are lots of different ways a song can be a hit, and lots of different ways that the business can benefit from it being a hit.”
Last year 25% of digital revenue for the Warner Music Group came from YouTube. Now the music industry wants to take advantage of YouTube’s marketing power to develop new streams of income. Fortune:
“If ever there was a company that could experiment with subscription versus ad-based models, it is Google. The power and size of YouTube’s music audience is vast, and growing, and likely presents an opportunity too good for the record companies to pass up. Most of the website’s top viewed videos are music, and the viewers of those videos represent a demographic that the record industry has always coveted: teens.”
Spotify isn’t the only player in the streaming music space. The new Google powered music service will also have to compete with Pandora, Rdio, Soundcloud, Muve Music, possibly Apple, and the new MySpace. YouTube’s position, especially when it comes to teens, gives it an advantage. 64% of teenagers prefer YouTube as their way to get music.