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YouTube Red Subscription Video Service Takes on Spotify, Apple Music and Tidal

by William Hoffman   Oct 21, 2015 21:36 PM EDT

In the often talked about battle of music subscription services, three big players are most frequently talked about.  Spotify, Apple Music and Tidal lead the pack and the discussions. However, what is usually left out of that conversation is the fact that with more than 1 billion users, YouTube trumps them all in terms of numbers, and today the video service announced the rollout of a new subscription model dubbed YouTube Red, which the company hopes will bring more money to content creators, more videos and more viewership.

YouTube Red will cost subscribers $9.99 per month ($12.99 for iOS users to cover Apple's in-app purchase tax) allowing users to watch all of YouTube's content ad free, download videos and playlists for offline play and listen to videos and music in the background while other apps are active. The subscription also includes Google Music Play, a more conventional competitor in the subscription music-streaming world, according to Tech Crunch.

YouTube will continue to take in 45 percent of ad revenue and splitting the remaining 55 percent with creators, but YouTube isn't divulging the exact split of the new subscription revenue. The Verge says creators will be paid a percentage of the total subscription revenue, minus YouTube's cut, based on the watch time of their videos each month. The company claims creators will still receive the majority of subscription revenue.

Google has tinkered with a subscription model for its video service in the past with donations for specific channels and premium content channels that never really caught on. A beta for YouTube Music Key launched last year and the team learned a lot about subscription models in that time, according to a feature on the new service covered by The Verge.

The previous plan was to have subscriber content for certain channels of YouTube's content including music, gaming and kids. However, given the spottiness of the beta, the team decided it was all or nothing.

This could be a huge threat to services such as Apple Music and Tidal, which have both aggressively pursued exclusive music videos from their exclusive artists including Drake, Beyoncé and Lil Wayne. If YouTube can convince even 5 percent of its U.S. viewers to sign up for the service, and that's a big if still, it would add $1 billion to the company's bottom line.

Given that music competitors offer a far less robust video service for the same price, the war for consumer dollars will rage on. However, YouTube Music also contends with video subscription services such as Netflix, Hulu and HBO, so it's a battle from all fronts.

Watch a hands-on video with the music portion of the service below.

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