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STREAM WARS: WILL MAJORS PART WAYS WITH YOUTUBE?

Post: The Freemium Battles Are Heating Up

After a lengthy war of words over “Freemium” streaming, word has it the major labels may be preparing to step up their battle against YouTube’s all-you-can-watch, ad-supported model. According to The New York Post, UMG, Sony Music and WMG are all hoping to fight YouTube’s monopoly on free music content by throwing their weight behind emerging social rivals (including Snapchat and Vessel); if that doesn’t work, writes the paper’s Claire Atkinson, they may pull their content entirely.

The story quotes a “senior industry source” who alleges that YouTube is “not serious about monetizing music on behalf of the creators,” which means the relationship behind music firms and the gargantuan netco may have to be “reset.” Another anonymous industry source bemoans Google’s autocratic control of deal terms and calls the company “One of the worst partners.”

YouTube owner Google has thus far shown no interest in abandoning the ad-supported model, and touts substantial revenues for content holders. But as UMG chief Lucian Grainge and Sony Music head Doug Morris have repeatedly emphasized, such a model, is not regarded as sustainable by the majors.

Meanwhile, YouTube has done next to nothing with subscription service Music Key, which soft-launched in November and is ostensibly in beta. Atkinson cites an unnamed exec who calls the service “a giant head-fake.”

With the growth in paid Spotify subscribers and potential for a windfall via the newly launched Apple Music—we’ll know more once the latter’s first free-trial period is over—the biz is clearly going full bore on subscription and doing its best to minimize the dominance of ad-supported/freemium access.

The problem with removing official music clips is that fans will almost certainly try to fill the gap by uploading their own unauthorized videos; as in the file-swapping days of yore, the majors could end up playing an endless game of whack-a-mole trying to keep infringing clips off the service.

YouTube, meanwhile, just announced the hiring of MTV programming chief Susanne Daniels, who will step into a newly created content-creation post.

In other streaming news, the Wall Street Journal reports that another target of music-biz ire, Soundcloud, is preparing a subscription service of its own. Currently, Soundcloud makes revenue from ads, like YouTube does, as well as fees from artists who want to upload more than the maximum allowed with a free account. Digital Music News, meanwhile, reports that Soundcloud is "dangerously low on cash" and is struggling to scrape together its next round of financing despite a $700m valuation.

A subscription tier would be its third source of income; one wonders, given its hostile relationship with music companies, how this might come about. In discussing the planned service, co-founder/CTO Eric Wahlforss would neither confirm nor deny that the company is planning an IPO.

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