UPDATED: Nearly two decades after the arrival of Napster, the music industry has learned how difficult it can be to persuade people to pay for something they’ve grown accustomed to getting for free. In an effort to push certain music users toward its long-promised new subscription service — which was expected to premiere this month but has been further delayed — YouTube will increase the number of ads that those users see between music videos. Thus, anyone attempting to use YouTube as a conventional streaming service will find themselves reminded more of an ad-heavy radio station.
“You’re not going to be happy after you are jamming ‘Stairway to Heaven’ and you get an ad right after that,” Cohen said in an interview at the South by Southwest music festival, according to a report in Bloomberg.
A source close to the situation emphasized to Variety that YouTube is not increasing ads for most music users, but rather a specific subset who attempt to use the platform like a conventional “hit ‘play’ and leave it running” paid music service. That perspective was elaborated upon in an official statement from a company spokesperson Monday: “Our top priority at YouTube is to deliver a great user experience, and that includes ensuring users do not encounter excessive ad loads. We do not seek to specifically increase ad loads across YouTube. For a specific subset of users who use YouTube like a paid music service today – and would benefit most from additional features – we may show more ads or promotional prompts to upsell to our paid service.”
The move is the latest in the Google-owned service’s efforts to improve its relations with the music industry, which has complained loud and long about its comparatively low royalty payments. In a report last year, the global trade organization International Federation of the Phonographic Industry (IFPI) singled out YouTube as the single greatest threat to the renewed growth of the music industry, saying, “The value gap, [which is] the growing mismatch between the value that user upload services, such as YouTube, extract from music, and the revenue returned to those who are creating and investing in music.”
The company’s past efforts at launching a paid service — most of which predate Cohen’s arrival in 2016 — have been largely unsuccessful, but he told Bloomberg that the new service, which is already being used by thousands of employees at YouTube’s parent company Google, will “frustrate and seduce” users of YouTube’s free service with exclusive videos, playlists and other offerings; he said their efforts would “smoke out” potential subscribers and lead them to the new service.
“There’s a lot more people in our funnel that we can frustrate and seduce to become subscribers,” Cohen said. “Once we do that, trust me, all that noise will be gone and articles people write about that noise will be gone.”
The approach is a more strongly-worded version of a tactic Spotify has taken to convert users from its freemium to its paid service — many people become frustrated with hearing the same ads every few songs and eventually pay for a subscription. While the industry initially was outraged over the freemium service, Spotify has trumpeted the tactic’s success and spoke at length about it during their “Investor Day” presentations last week ahead of their public listing early next month. Time will tell whether this more hard-nosed approach will succeed.