YouTube Premium Music Won't Threaten Pandora and Spotify -- Here's Why

YouTube is struggling to come to a licensing deal with indie music labels for its forthcoming subscription music service. Will a deal ever get done? Will competitors Pandora (NYSE: P  ) and Spotify profit from the chaos?

Guest host Alison Southwick put these questions to Fool analysts Nathan Alderman and Tim Beyers in this week's episode of 1-Up on Wall Street, The Motley Fool's Web show in which we talk about the big-money names behind your favorite movies, toys, video games, comics, and more.

Right now, Google (NASDAQ: GOOGL  ) (NASDAQ: GOOG  ) arranges for labels to post tracks to YouTube freely and earn advertising revenue. They can also choose to allow "ripped" tracks to persist on the site, sharing in ad revenue they produce. YouTube told Billboard that it has paid more than $1 billion to rights holders "over the years."

Indies may not be able to count on that income much longer. According to Billboard, YouTube is threatening to pull indie tracks it can't secure the rights to for premium listening. Tim says that's a stark and draconian response, especially if listeners have already proved willing to accept ads. Meanwhile, both Pandora and Spotify have thriving ad-driven streaming options as of this writing and could fill the gap if YouTube makes good on its threat.

Nathan agrees, saying the move fails Google's stated strategy to not be evil. Instead, it looks like an effort to strong-arm the music industry's little guys into a deal they don't want on terms they can't accept -- a potentially troubling sign for investors who've been told they should expect better.

Now it's your turn to weigh in. Do you believe YouTube's premium music service represents a threat to Pandora and Spotify? Click the video to watch Alison put Nathan and Tim on the spot, and then leave your take in the comments box below, including whether you would buy, sell, or short Google stock now. You can also follow us on Twitter for more segments and regular geek news updates!

How to earn even more
Even if you aren't collecting royalty checks for a hit record, chances are you've been affected by recent tax increases. The good news? With the right planning, you can take steps to take control of your taxes and potentially reduce what you owe. In our brand-new special report "The IRS Is Daring You to Make This Investment Now!," you'll learn about the simple strategy to take advantage of a little-known IRS rule. Don't miss out on advice that could help you cut taxes for decades to come. Click here to learn more.


Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 3011850, ~/Articles/ArticleHandler.aspx, 8/27/2014 1:05:58 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement