Rumor Fact(ory): Music Key changes and trouble possibly brewing at YouTube

youtube square canvasWe learned recently that the official YouTube Music Key launch has been postponed, and two new rumors circulating about the popular video platform could provide some insight as to why.

First, there has been speculation that YouTube is aiming to make Music Key part of a bigger subscription video service, positioning it as a rival to Netflix and Hulu as well as to music-centric streaming platforms. Bloomberg reported that YouTube has signed content partners representing more than 90% of the site’s viewing onto this potential new paid subscription offering. That includes a whole range of YouTube-based talent, including music video channels, and an anonymous source told Bloomberg that there is a potential that Music Key may get lumped into this new offering. However, YouTube is missing content from traditional TV networks, which have been hesitant to put their clips behind a paywall on the site that has long offered them to viewers for free.

The second rumor is that music labels may be questioning the current status quo of YouTube’s ad-supported model. A New York Post exclusive claims that each of the major labels is considering removing their content from the platform. “They are not serious about monetizing music on behalf of creators and, as a result, music companies are realizing they have to reset the current relationship,” one source told the Post. “When you look at how music is monetized from lowest to highest, YouTube is at the bottom,” another unnamed label source said.

Let’s address each rumor separately.

YouTube is going to face an uphill battle from its users in getting conversions to a paid service. It will take a serious balancing act to convince viewers that the content has been free for so long is worth paying for. And with YouTube known as the place to find clips and rips of questionable legality, who’s to say that it won’t be just as much a victim of paywall backlash? So it’s possible that making a more comprehensive multimedia offering is an effort to make the paid tier more attractive. The jury’s out on how successful that strategy would be.

For the second point, labels and YouTube have often had a tense relationship. Music Key could have ostensibly been a peace offering, giving both parties more opportunities to make money from music-based clips. YouTube does have a trump card in the original talent that is not beholden to labels, but with other creator-focused platforms like Vessel emerging as alternatives, the company is being tasked with pleasing a wider array of people with different goals. If Music Key or some other accord that makes the talent and the labels happy doesn’t come soon, the subscription service may never get a chance to get out of beta because the amount of material will get slashed in a mass exit.

Anna Washenko