YouTube's new music label deals pave way for upcoming music service

The digital music streaming space has become quite competitive over the past few years with the likes of Apple competing with Spotify for the top spot. Although the latter has a huge user base that easily eclipses the other, it hasn't prevented these companies from trying their best to entice users to their own platform. Despite Google having its own music streaming service in the form of Play Music, it has tried to also offer a music streaming service through YouTube.

While YouTube Music is still currently an option to this day, it isn't quite as popular when it comes to generating revenue. Despite YouTube being used by millions to listen to music, the company has found it hard to translate that behavior into something more profitable. While it has been years in the making, rumors began to swirl earlier this month that it was close to securing a deal with music labels to launch a new music streaming service sometime next year. Now, it is being reported that YouTube has signed new deals with the two remaining holdouts that it has been pursuing.

Previous to the new deals, the firm was able to secure a new contract with Warner Music Group, and it has now also done so with Universal Music Group and Sony Music Entertainment. The former stated that the new deal will give its artists more flexibility and also a better revenue stream. Sony Music Entertainment was also asked about the situation but did not comment on the matter. With all three labels locked in, YouTube can finally start preparing its new music service slated to arrive early next year. According to an insider, Universal has now gained the ability to better control the upload of copyrighted material to YouTube. Also, when the service rolls out, some songs and videos will be locked out from the free service, only being made available to paying users.

It will be interesting to see how this all fits in with the current lineup of services that Google and YouTube offer. Currently, Google Play Music is the primary music streaming service but also gives subscribers free access to YouTube Red, which has original content and also provides commercial-free streaming of YouTube content. The subscription also extends privileges to YouTube Music, which is its own app, that allows streaming of audio by sourcing music content from YouTube. With its new deal in place, it has appeased music labels, but it will now be tasked with the conversion into a profitable revenue stream.

Source: Bloomberg

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