YouTube ready to launch paid-for music service to compete with Spotify, Apple

YouTube has struck a deal to licence music from the thousands of independent record labels represented by rights agency Merlin, setting the stage for the launch of its long-awaited subscription service.

People familiar with the matter said the deal was signed in recent days after months of acrimonious negotiations, in which YouTube threatened to take down music videos by artists such as Adele and the Arctic Monkeys if its demands were not met.

The agreement paves the way for the Google-owned company to finally launch a paid-for music service, to compete with rivals Spotify, the streaming service, and Apple's Beats Music.

"One of the last significant obstacles to getting to market has been removed," said Mark Mulligan, music analyst at Midia Research.

The news came as Spotify announced its monthly users had jumped 25 per cent to 50 million in the last six months.

YouTube, the world’s biggest online video service, plans to start rolling out its paid tier within weeks, according to people familiar with the matter.

It will allow users who pay a monthly fee to listen to music and watch videos without advertising, among other features.

The launch of a subscription service is likely to transform the relationship between YouTube and the music industry. The platform had been seen mainly as a way to promote artists rather than a way to make money.

If YouTube converted a large number of its billion monthly users into paying subscribers, it would generate big revenues for the music industry.

Midia Research forecasts the service will make $500 million (€400 million) in subscriptions within a year – a large amount for the $15 billion (€12 billion) global recorded music market.–(Copyright The Financial Times Limited 2014)