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Unlocking YouTube How YouTube’s Music Key Will Impact Subscriptions

Report by Mark Mulligan and Martyn Davies
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The 20,000 Foot View

YouTube is the globe’s leading digital music service but it delivers comparatively little back to the music industry in direct revenue.  Even the one billion dollars paid out in Content ID revenues only represents        for each of its one billion users per year, since the launch of Content ID in 2007.  Now YouTube is poised to launch its long anticipated subscription service, Music Key. It should prove to be among the most compelling music product offerings in the marketplace, yet YouTube’s net impact on the subscriptions’ sector will still be net negative with its free tier sucking the oxygen from its premium competitors. 

Key Findings

  • Only        of YouTube’s monthly music video users watch more than three music videos a month, representing        of all consumers 
  •        of Vevo music viewers account for        of video streams, while        account for just       
  • YouTube’s music video audience has a youngish skew –        are aged under        – but there is also strong representation across all age groups
  •        of consumers would pay for a YouTube music subscription service         of consumers say they have no need to pay for any subscription because they get all they need for free from YouTube
  • Even if YouTube’s Music Key acquired        million subscribers in its first year, its net revenue impact on the global subscription service would be minus        billion
  • YouTube’s Music Key could also leave a gaping hole in Vevo’s ad revenue business, by converting many of Vevo’s most active users
  • Record labels need to reassess YouTube’s market role, because the promotional platform is becoming the end product itself for most viewers

Companies mentioned in this report: Google, YouTube, Vevo, Spotify, Soundcloud, Grooveshark

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