We know from Spotify’s growth that free music-streaming can be a powerful funnel towards paid subscriptions.
We also know that YouTube’s catalogue of music videos is the biggest free music-streaming funnel of all: but one where the upgrade path to a subscription is currently geographically-limited (with YouTube Red) and much-discussed over whether it’s effective.
But as Red prepares to roll out much more widely, possibly under a new name and with an even-stronger music focus, YouTube has been talking about how it plans to make its funnel work.
“There’s a lot more people in our funnel that we can frustrate and seduce to become subscribers. Once we do that, trust me, all that noise will be gone and articles people write about that noise will be gone,” head of music Lyor Cohen told Bloomberg in a new interview about YouTube’s plans to “smoke out” frequent music users who are likely candidates for a paid subscription.
That frustration and seduction will focus on advertising: showing people more ads if they spend a lot of time watching consecutive music videos on YouTube.
“You’re not going to be happy after you are jamming ‘Stairway to Heaven’ and you get an ad right after that,” said Cohen.
His comments made enough waves to spark a swift clarification from a YouTube spokesperson: “Our top priority at YouTube is to deliver a great user experience and that includes ensuring users do not encounter excessive ad loads,” they said.
“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.”
This should be good news for musicians and the music industry, and not just because it may get YouTube’s revamped subscription service off to a flyer.
More ads around music videos means more revenues, and thus more royalties, whereas (as we’ve reported before) under the existing system, four-minute music videos aren’t always best-placed in YouTube’s ad-serving algorithm compared to the longer vlogs, tutorials and gaming videos on the platform.
One challenge to any promise of serving more ads, though, is that there need to be more ads to serve: YouTube’s inventory is already massive, and ensuring demand and supply match is tough, even as budgets continue to move from television and radio to online video.
Let’s be optimistic, though. Spotify’s subscribers are growing well thanks to its freemium model. Apple Music’s are growing well thanks to its free trials and device penetration. Amazon’s are growing well thanks to its smart-speaker sales and ability to market to mainstream consumers. If YouTube can become a fourth global service with its own effective free-to-paid funnel, that variety is excellent news for our industry.
One final note, on YouTube users’ propensity to pay. App analytics firm Sensor Tower has just put out some new research noting that YouTube’s iOS app has just become the top-grossing iPhone app in the US – the first time in its history that it’s topped this particular chart.
“Gross user spending to date is more than $200 million worldwide on iOS since the start of YouTube’s in-app monetisation in 2015,” reported TechCrunch. “Last month it grossed approximately $14 million, a 133 percent year-over-year increase from February 2017.”
This isn’t just Red subscriptions, it’s also the ‘Super Chat’ virtual tips that YouTube has been rolling out. But again, it’s an encouraging sign, albeit from one country, that the perception of YouTube users as unwilling to pay for content may be underestimating that audience.
Or at least a decent-enough chunk of it to make Red’s revamp an enticing prospect.