YouTube to borrow Spotify tactic: “frustrate” some users with ads to sell streaming music subscriptions
Google’s YouTube is one of the most visited sites on the internet, with 1.5 billion users watching videos on its platform every month. Different users go there for different things, but there is one type of user that the company thinks is ready to pay for a premium service: people who use it as a music streaming website.
YouTube is planning to increase the number of ads that play between music videos on its site. What this means in practice is that if you’re watching non-musical videos, you won’t see a difference. But if all you do is leave a YouTube playlist on in the background, you’ll find a plethora of ads popping up between songs. The solution? To pay for a forthcoming subscription music service.
Alphabet’s share price has risen by 34% over the past 12 months
SOURCE: Yahoo Finance
This is a move taken straight from streaming music service Spotify’s books. Spotify lets anyone open a free account and listen to music, but it only allows you so many “skips” of songs on albums or playlists, and (unless you upgrade to a paid subscription) bombards you with ads between songs. It’s an effective method: give people something good for free (streaming music) but offer them a simple, and cheap, way to make it much, much, better (by removing annoying ad breaks in a playlist).
YouTube’s head of global music puts it more simply: “You’re not going to be happy after you are jamming ‘Stairway to Heaven’ and you get an ad right after that. There’s a lot more people in our funnel that we can frustrate and seduce to become subscribers.”
Paid music subscriptions are the fastest growing segment in the U.S. music world, so there’s no doubt the demand is there. YouTube’s decision to tap into it could provide a good counterbalance to Spotify, and help it answer questions about its relationship with music execs: will any of the extra revenue this generates make its way to record labels?
Dominion holds Alphabet, the parent company of Google, in its Global Trends Ecommerce Fund.
If you would you like to receive the Newsfeeds daily, please click here to sign up now!Help us make this Newsfeed better by rating this article. 1 star = Poor and 5 stars = Excellent
- Click here to print this story: Print
The views expressed in this article are those of the author at the date of publication and not necessarily those of Dominion Fund Management Limited. The content of this article is not intended as investment advice and will not be updated after publication. Images, video, quotations from literature and any such material which may be subject to copyright is reproduced in whole or in part in this article on the basis of Fair use as applied to news reporting and journalistic comment on events.