Just recently, YouTube announced the upcoming release of it’s new paid streaming music service Music Key. Although some of the more specific technical details of the service have yet to be announced, the website promises three key things: (1) ad-free music, (2) background listening, and (3) offline playback. Reportedly, this service will be valued at $10 a month for subscribers. Mashable took a stab at explaining the rationale behind the new service.
This is actually a pretty big deal. Not because this hasn’t been done before. A quick look at a little old app called Spotify would disprove that notion. However, it’s no secret that YouTube is one of the most visited websites in the world, averaging 1 billion visitors a month. On top of that, the site is owned by Internet giant Google. The launch of Music Key indicates an experiment with freemium subscriptions on one of the most widely used platforms on the Internet – and one that is very much known for being 100% free.
Freemium is a pricing strategy by which a product or service (typically a digital offering such as software, media, games or web services) is provided free of charge, but money (premium) is charged for proprietary features, functionality, or virtual goods.
Freemium appears to be popping up everywhere these days. From in-app purchases, such as in Clash of Clans that leads to media-reported £7,000 phone bills, to social networks such as LinkedIn that charge more for in-depth services and features, Internet companies, app developers, and the likes look to be diversifying the ways in which they generate revenue online. Gone are the days where ads paid the bills and generate revenue for artists. Now, there’s the possibility of raising money from those Internet browsers who need that extra bit of service hidden behind the paywall.
But does Freemium guarantee success? I would say no. Consumers are used to getting things for free on the Internet (unless they’re online shopping). There needs to be a considerable amount of incentive to pay a subscription fee, when it is so easy to access free information and/or content with just a few more clicks. A post on Forbes would agree stating that, for freemium, you need: the right market, with a gap in said market; a compelling reason to upgrade; and proper metrics to measure success.
So will YouTube Music Key be successful? It remains to be seen. YouTube is a massive Internet entity – so the success of its paid option will be watched by many. Success in the freemium market for such a popular, formerly 100% free website could cause significant changes to the Internet landscape.
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