YouTube doesn’t call itself a music-streaming service, but it’s the biggest one in the world.
With 1.5 billion people logging on every month, the video site is eight times larger than Apple Music and Spotify combined, according to a report from the International Federation of the Phonographic Industry earlier this year. The IFPI noted that 85% of YouTube users, or 1.3 million people, use the platform to listen to music for free—a number that has sent the music industry into flurries of rage. Ad-supported streaming makes much less money for artists and producers than subscription services like Apple Music and Spotify.
YouTube has now found a way to quell record labels’ anger: launching a paid streaming service itself. In March, the Alphabet-owned company plans to introduce “Remix,” a service that will offer on-demand streaming along with “elements from YouTube, such as video clips,” according to Bloomberg. Warner Music, one of the three biggest record labels in the world, is already on board; YouTube is in talks with the two others.
It seems an odd play. Music streaming is already oversaturated—even the existing players are struggling to make much money—and one service, Spotify, has already established itself as a clear leader.
But consider once more the sheer size of YouTube’s customer base. YouTube boasts enough loyal users that it can in just a few months skyrocket relatively unknown musicians into record-breaking territory (see: summer hit “Despacito”). And while Alphabet’s previous attempts at paid entertainment services have only seen modest success—Google Play Music, which offered on-demand audio streaming; and YouTube Red, which let subscribers watch videos without ads—note that “Remix” offers both things in one. The winning combination just might be enough to stunt Spotify’s growth, if not knock it off its throne.
“The industry should be really, really careful because they could close their eyes and wake up with their revenue really concentrated in two, three sources,” Lyor Cohen, YouTube’s head of music and a former label executive himself, said this summer. Translation: YouTube isn’t a threat to the industry, just healthy competition. Now we’ll see just how close that fight can get.