YOUTUBE TOOK ITS biggest step towards launching a music subscription service after it signed a deal with Merlin, the network that represents the licensing rights for thousands of independent record labels.
The Financial Times report that the deal was signed in recent days following months of negotiations, which involved YouTube threatening to take down music videos by artists like Adele and the Arctic Monkeys if its demands weren’t met.
It’s believed that the terms agreed for this deal were more favourable than the terms, in comparison to what was offered back in June.
YouTube had already signed deals with the three major record labels: Universal, Sony and Warner, but to properly launch a service, it needed to tie down a deal with Merlin, which represents 20,000 independent labels.
The company also plans to start rolling out its paid music service within weeks, according to the FT. The service will allow users to pay a monthly fee to listen to music and watch videos without ads. They will also be able to save music for offline viewing as well.
YouTube has paid out more than $1 billion to the music industry through licensing deals that allow rights holders to take a share of advertising revenue.
The site is also considering offering a tiered service for the site in general which would allow users to pay monthly to avoid ads.
Yesterday, Spotify said it had paid out more than $2 billion to rights holders in the music industry – $1 billion coming from the past twelve months – and had 50 million active users, 12.5 million of which pay for the service every month.
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