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YouTube to Block Music Videos from Labels That Don't Sign On for Subscription Service

Todd Spangler

Variety

1:30 PM EDT, June 17, 2014

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YouTube is playing hardball with music companies: The Internet video service this week will begin removing videos from indie labels that have refused to agree to the terms for its music-subscription service, Google confirmed.

YouTube plans to launch the music service later this summer. It has inked pacts with music companies representing 90% of the industry, Robert Kyncl, YouTube's head of content and business operations, said in an interview with the Financial Times. That includes the three major labels Universal Music Group, Sony Music Entertainment and Warner Music Group.

But independent labels that have not agreed to YouTube's terms will have their content removed, according to the company. Those include XL Recordings, whose artists include Adele, and London-based Dominio, the Arctic Monkeys' label, the FT reported.

In a statement, YouTube said, "We are excited that hundreds of major and independent labels are already partnering with us."

The company added, "Our goal is to continue making YouTube an amazing music experience, both as a global platform for fans and artists to connect, and as a revenue source for the music industry. We're adding subscription-based features for music on YouTube with this in mind -- to bring our music partners new revenue streams in addition to the hundreds of millions of dollars YouTube already generates for them each year."

YouTube has not announced pricing for the ad-free music subscription service. The offering will face a host of competitors, including services from Spotify and Apple, which recently acquired Beats for $3 billion. Last week, Amazon launched Prime Music, a service available as part of the $99-per-year Prime free-shipping and video-streaming service, with more than 1 million songs.

The concern among labels refusing to agree to YouTube's deal is that it will devalue services already in the market. European indie-music trade group Impala has filed a complaint with the European Commission about YouTube's negotiating tactics for the new service, according to the FT report.

YouTube's subscription music service would come after Google a year ago introduced Google Music Play All Access, a $10 monthly service touting access to millions of songs.

Revenue from ad-supported and subscription-based music services in the U.S. are projected to more than double between 2014 and 2018, from $2 billion to over $4 billion, according to research firm eMarketer. Over the same time period, music-download services are expected to grow about 20%, from $527 million to $630 million.

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