YouTube music is a big challenge for Apple and Spotify.

Earlier this week, YouTube launched its much awaited Music app, in the US. This is intended to cement the stronghold which the popular video streaming site has over the younger online age groups and to seriously enter the music streaming market. YouTube has been quietly, incredibly popular among younger audiences for consuming music, especially over the likes of Apple Music which is much more premium and Google Music which is too poorly promoted.

Youtube poses a huge challenge however, to music streaming’s biggest  platforms; Apple and Spotify. This is especially true while both suffer with some fairly major problems. Apple, firstly has failed to retain most of the free trial subscribers it got on board. While you can point to the figures of platform vs platform, per user, it’s a pretty bad result given this was a big launch, with the app being automatically added to every iPhone. Spotify has another problem, people are not signing up to premium as much they need to be. The result is that Spotify has to work much harder to sell as space to reach its younger audience who are seemingly unwilling to pay.

Music is an attempt, by Google to do two things. Firstly, to capitalise on the youth market which they have been incredibly successful in doing to date. Secondly, and more urgently it is to monetise YouTube. Famously loss making since its purchase, YouTube has been a long term investment for Google, and this is now coming into fruition with YouTube Red, of which music is a part.

But what makes YouTube music different? Well, it’s been growing a lot of channels over time, to the point at which many are now commercial businesses with loyal audiences. Those audiences it now feels would pay the monthly fee to be ad-free and get special content and features.  Google also has a lot of information about the people who use YouTube, that’s allowed them to create curated playlists through a mixture of human oversight and machine learning. It’s something that Apple struggle with because of their stance on user data collection, Spotify also have no way to gather this information.

Human and machine curation is an interesting approach, Google is using the raft of information about each user to get as much insight as possible, but much like Facebook M, a human go-between ads common sense and context to everything

YouTube music won’t allow you to create playlists like Spotify does though, it focuses in on core feature that the end user wants, the belief (and possibly correct assumption) is that the average person doesn’t want to create playlists, they want to consume content. YouTube allows you not just to listen to music, but to save video content offline to watch wherever you might not have connection. While it has the same 30million odd tracks that the other services have, it also has videos, concerts and a host of other content.

Most importantly, YouTube has done what Apple actually does best. It played the long game and now aims to enter an industry to disrupt it. It has the information, the data and the loyalty to just get away with is

YouTube Red, and YouTube Music are currently available in the US, and should be coming to Europe soon.

Product Placement and Paywalls, beating the AdBlockers.

Ad-blocking has by far become one of the most talked about things for online publishers in recent months. Apple now allowing adblocking, combined with a host of services and add-ons for browsers which supported this previously have led to an explosion in the number of people using the service to view content without distraction.

Statistics vary, but a recent poll by the YouTube star PewDiePie has shown that at least 40% of his audience have admitted to using some kind of ad-blocking tool when browsing the web. Figures for other sites could be much higher. The problem lies, primarily in a lack of understanding many average internet users have of website revenue.  Free services need to generate income from somewhere, to deliver quality reporting, quality content. Something reliable which can’t be gotten from social, or blogs.

This is particularly harmful to newspaper outlets, who have seen a sharp decline in offline sales, combined with a drop in revenue from online ad impressions. As an industry newspapers have had to be increasingly resourceful in their efforts to hold onto online revenue, from sponsored articles, to product placement and even the much maligned paywall, a route The Sun have recently scrapped.

However, adblocking doesn’t just affect large companies, who may, or may not be able to afford the hit (generally speaking, they can’t). It also affects smaller organisations and individuals who are now becoming the new age celebrity. Small news sites now find it increasingly difficult to start out. Separately, YouTube celebrities now have to rely increasingly on product endorsement.

While the YouTube celebrity could be easily dismissed as a fad, their figures say otherwise. Many YouTube stars have video reach both greater, and more qualified than most traditional TV channels could ever dream of. Many have made this a career choice, with YouTube matching this by establishing their own studios. However, all of these millions of views boil down to very little when ads can’t be served to viewers, the content can’t be produced and the service that supplies them can’t exist.

This is where Subscription services, such as the new YouTube Red enter. Red attempts to answer the fundamental issue of declining ad revenue with a subscription based model, not unlike Netflix; monthly charges for your favourite content produced to a high degree of quality.

For any subscription service, the question is always asked just how it can survive. The world we live in, consumers expect to be able to consume high quality content without having to pay and without having to see ads, but seeing no correlation between this and declining quality. Most would dismiss subscriptions as pointless for most content, given the Internet’s open nature.

A separate argument exists, however. The Washington Post paywall has seen growing success for the newspaper, recently taken over by Jeff Bezos. While all content is designed for consumption across multiple devices; the strategic view from the Post is that if content is of good enough quality, with supporting content being tailored as you consume more information then it is something worth paying for.

Speaking at the Dublin Web Summit, Steven Hill of The Post took the example of a person in a specific location, who enjoys viewing video. The site will tailor content served to be more relevant to both the persons locations and their taste, so they’ll get more video. High quality reporting also engenders a strong element of trust, which can’t be gotten elsewhere.

The Washington Post certainly have the numbers to back it up. Year-on-year, desktop and mobile traffic has increased, with 78 million unique visitors and growing with mobile and desktop traffic both increasing. Interestingly, paid subscriptions, while lower than unique visitors, has been growing strongly.

Other companies, such as Spotify may use more straight-forward means to get you to jump onto subscription services, but The Washington Post to some degree have shown that content can very much, still be king.

How this will pay off in the long term, remains to be seen, and whether this will be more effective than product placement or sponsored posts is anyone’s guess. It is interesting however, to see how clever use of content, combined with a level of consumer understanding and quality content still appear to work.
Best guess would have to be that in the end, a mix of both will work. Consumers won’t want to be educated about why they need to see ads, but ads can be smarter to not be as annoying.