Can Spotify Shake Off Youtube ?

In Music, Opinion, Technology

After many months of speculation, analysis, and legal wrangling, Google have officially announced the launch of Youtube Music. The service called Youtube Music Key will offer users of the video sharing site the option of paying a subscription to watch and download music videos without the need to watch pre-roll adverts.

This latest development has left many questioning what chance current online streaming market leader Spotify has in fighting off the behemoth that is Google. And it also raises questions about what Apple plans to do with its recent acquisition of Beats Audio which it purchased back in May this year for a rumoured $3bn.

Google’s announcement comes during the same week that Taylor Swift, pulled her entire back catalogue from Spotify, citing poor earnings from the Swedish based service. Spotify founder Daniel Ek responded a few days later to Swift’s criticism with a blog post, claiming that the service had paid out $2bn since 2008. The post also highlighted that the service has over 50 million active users, 12.5 million of which are paying subscribers. Ek post also drew attention to the fact that without Spotify, that two billion dollars would have been lost to piracy.

“Youtube has by many been seen as a way to cheat the system, not too far away from the likes of peer-to-peer file sharing services.”

“… And that’s two billion dollars’ worth of listening that would have happened with zero or little compensation to artists and songwriters through piracy or practically equivalent services if there was no Spotify – we’re working day and night to recover money for artists and the music business that piracy was stealing away.”
A number that Spotify can take some comfort in when it comes to the launch of Youtube Music is 50 million active users. That’s 50 million people who use, are comfortable with, and find Spotify’s offering compelling enough to return again and again. It will certainly be a huge task for Youtube to turn current users into subscribers.

For many people who currently use Youtube to stream music, it’s a convenient free way to access music, much of which is available unlicensed by labels. Youtube has by many been seen as a way to cheat the system, not too far away from the likes of peer-to-peer file sharing services. A position which Napster one of the first well-known music sharing services, held in the early 2000s. Roxio who acquired the Napster brand name and tried to capitalise on Napster’s brand liquidity by launching as a legal and subscription service in 2003, but failed to garner the same friction as the original service. With many shunning the paid service for the likes of Youtube and other peer-to-peer services. Could Youtube be destined for the same fate, or will they manage to turn current users into subscribers.

It’ll certainly be interesting to see if users take to the Youtube approach of subscription music streaming, or if Spotify’s first to market position will see it hold off the upstarts from San Bruno.

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