Watch out Spotify; Google's building YouTube 'Music Key'

It envisions an ad-free, subscription-based streaming music service

Google is reportedly eying the creation of a YouTube music subscription service to take on the likes of Spotify and Pandora.

The service is expected to offer ad-free music and off-line access and cost $9.99/month after a 30-day free trial, according to Android Police, which alos posted images of what Google appears to be calling YouTube Music Key. The site also notes that the company has added more than 20 million music tracks and already acquired the domain YouTubeMusicKey.com.

Google declined to comment. The company, however, has been moving in this direction.

Late last year, Google tried to buy Spotify, and early last month it scooped up Songza, a music streaming service. While the New York Times reported that thaty was an approximately $39 million acquisition, neither company would comment on the purchase price.

Songza works by recommending different playlists, based on what the user is doing, such as exercising, working in the office, cooking dinner or driving down a dirt road. Music lists can be based on different bands or singers, along with genres, themes and eras. Playlists also are based on the day of the week and the time of day.

At the time of the purchase, Google said it would work Songza into YouTube and Google Play, its online market for music, eBooks, apps and games.

Ezra Gottheil, an analyst with Technology Business Research, said he expects Google will use Songza to help it create its own streaming music service. And he added that Google is making a smart move by reportedly tying a new service to YouTube.

"If you want to hear a specific song by a specific artist, YouTube is the place to go," he said. "My college roommate and I were remembering The Dead playing "All Along the Watchtower." We found at least four versions on YouTube."

Gottheil noted that Google wants to capture some of the eyeballs that music services, like Spotify and Pandora have grabbed. It's all about keeping people on Google-owned sites and apps.

However, Patrick Moorhead, an analyst with Moor Insights & Strategy, said it's also about advertising.

"For Google to maximize its advertising business model, it needs to track everything a person is doing all the time," said Moorhead. "This enables the company to build better profiles and serve up more, and higher-priced, ads. As people are spending more and more time streaming music, this makes it important to Google."

And while Google sees services like Spotify as a threat, current streaming music services should be looking over their shoulders to see what Google is doing in their space.

"The threat goes both ways," said Moorhead. "Because both Spotify and Pandora have active, streaming music businesses, there's the risk of Google taking some of that business. On the other hand, time spent with Spotify or Pandora is time not spent with Google."

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