YouTube’s music services garner 50 million paying subscribers

Updates from YouTube Inc

YouTube’s paid music streaming services have racked up 50 million subscribers, a milestone for Google as it competes with Amazon, Apple and Spotify in a highly competitive market.

After a slow start since launching in 2018, YouTube’s music streaming services have attracted millions of new paying users in recent months to reach 50 million subscribers in August, according to two people briefed on the numbers.

That’s up sharply from the 30 million subscribers reported by YouTube in October last year, and reflects growing demand for YouTube Music, which costs $ 10 per month, and YouTube Premium, an expanded product with additional video features that cost $ 12 per month.

After years of friction with the music industry over YouTube’s struggle to convince some of its billions of users to pay for content, Google hired Lyor Cohen – a longtime record manager who has helped to develop artists like Kanye West – to lead the launch of YouTube Music and turn into a rival of Spotify.

The expanded subscriber base makes Google a real competitor in the paid music streaming market after a series of failed product launches over the years.

YouTube did not respond to a request for comment.

YouTube Music “was becoming to Gen Z what Spotify was to millennials five years ago,” said Mark Mulligan of Midia Research, an industry consultancy.

“Google’s YouTube Music has been the defining story of the music subscriber market. . . resonating both in many emerging markets and with younger audiences around the world, ”he added.

Spotify said it reached 165 million subscribers in the second quarter, while Apple and Amazon had 78 million and 63 million subscribers at the end of the first quarter, respectively, according to Midia’s estimates. Spotify launched in 2006, Apple in 2015, and Amazon in 2016.

YouTube’s recent growth spurt defies more conservative expectations on Wall Street when it first announced. When it launched in 2018, analysts at Morgan Stanley predicted that YouTube Music would only reach 25 million subscribers by 2022.

Analysts questioned whether YouTube Music would succeed after Google’s previous forays into paid music streaming, such as Google Play and YouTube Red, failed to gain traction.

YouTube is the world’s largest video site, and the brilliantly produced videos by pop stars attract billions of views. But record companies and artists have complained for years that YouTube is hurting the industry with a proliferation of videos of fans using their music without a license.

After joining YouTube in 2016, Cohen sought to mend relationships with major music labels – Universal Music, Sony and Warner – touting a new service to “make them rich,” according to executives involved in the meetings at the time.

“I’ve seen this industry evolve from an audio business to an audio-visual company, and now – as my friend Chuck D says – to an audio-visual company,” Cohen said in June. “As an audio-visual platform, our goal is to become the main revenue generator for the music industry. “

At the time, Cohen said YouTube paid more than $ 4 billion to music rights holders in the past 12 months. Of the $ 4 billion, 30% came from subscriptions, while the rest was advertising revenue, he said.

By comparison, Spotify said it paid rights holders $ 5 billion last year.

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