YouTube Releases Paid Music Product

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By Douglas A. McIntyre Published
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Investors have asked how Google Inc. (NASDAQ: GOOG) will make money on YouTube since it bought the company for $1.65 billion in October 2006. YouTube is by far the largest video site in the United States. Dwarfing all of its competitors, it had 159 million unique visitors in August, according to comScore. Now, with a paid music service, YouTube may have opened a door to more revenue.

YouTube does have video rental and advertising based sales. However, these have not been enough to make the video site a line item on the Google earnings reports.

Google management, in a blog post, announced Thursday:

You’ve asked us for ways to listen to music without ads, to keep playing music videos even if you lock the screen or start using another app, and to play music even if you’re not connected to the Internet. That’s why today we’re introducing YouTube Music Key beta, a monthly subscription service starting with the promotional price of $7.99/month (discounted from $9.99/month) that will give you all that — ads-free music, background play and offline viewing. It will also include a subscription to Google Play Music, with 30+ million songs, expert-curated playlists, and in the coming days, the ability to watch many YouTube official music videos right from the app.

Thanks to your music videos, remixes, covers, and more, you’ve made YouTube the biggest music service on the planet. To turn YouTube into your perfect music service, we’re launching YouTube Music Key as a beta with our biggest music fans first, and then we’ll bring YouTube Music Key to the whole world together. So, if you see an invite in your app or email, try it out for six months for free.

The product may be in beta, but it won’t be for long. YouTube has to justify its existence as a Google property.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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