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Google seeks to break music duopoly

Posted on May 25, 2018

 

Internet giant Google is upping its game to take a bigger step into the music distribution industry by overhauling its current music services in a bid to crash the duopoly created by Apple and Spotify.

The company is unveiling its new music service this week, which will be promoted via YouTube. The popular video site is owned by Google and its umbrella company, Alphabet. The new service is called YouTube Music and is a subscription service that essentially mimics the current model used by Spotify. It is believed there will be a free version of the service, which will incorporate adverts and have limited functions compared to the paid service. The latter will cost potential users around $10 per month and will be advert free.

This industry is current dominated by two big hitters – Spotify and Apple Music. Between the two platforms, there are 125 million paying customers who subscribe to streaming services. This type of music distribution has changed the way in which people listen to music and even counts towards the music charts, with number of streams being a factor in deciding who has the current number one song or album.

This is not the first time that Google has attempted to enter this sector. It has had three previous attempts at breaking into this industry through YouTube Red, YouTube Key and Google Play. However, none of these had proven to be a hit with users. These failed attempts to enter the market led to greater levels of users for the big two, with tens of millions of users signing up to their services in the last few years.

YouTube is the largest video site in the world, and is already a big part of the music industry with millions of people scouring the site for their favourite pop star’s latest music video. The rise of YouTube also enabled a rise in music videos, with big budgets being spent on slickly produced content.

The biggest hit of 2017 was ‘Despacito’ by Luis Fonsi and Daddy Yankee, which has been viewed well over five billion times. Approximately one third of all of YouTube’s advertising revenue came from music in that year – a figure up 27% on that of 2016.

A forecast for YouTube music by Morgan Stanley analysts suggests that the service will attract around 25 million paid users in the next four years and generate around $3bn (£2.25bn) in revenue. While this would help diversify the music distribution industry, executives in the music sector are exercising cautious optimism, suggesting that it will not be better than Apple Music or Spotify, but could be just as good.

Alan Littler
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