YouTube opens Merch Store

20 October 2011

by Eamonn Forde

YouTube is moving more directly into retail through the launch of its Merch Store which will allow acts and labels to sell music, merchandise and tickets direct from their official channels.

YouTube already lets users (where available) buy official downloads from iTunes and MP3.com but this new initiative will integrate with third-party services including Topspin for physical product and merchandise and Songkick for tickets. The new offering will be rolled out globally in the coming weeks.

It added, in a blog posting, that it is taking steps to “make it easier for indie labels to become YouTube partners and share revenue when their music is played, even in user generated content”.

The timing of this launch has prompted speculation around what parent company Google’s wider music ambitions are. It is rumoured to be launching its own music download and streaming service (quite distinct from its existing music locker in the cloud currently in beta in the US) in the coming weeks and it could interlink with YouTube’s Merch Store.

With over 800 million daily visitors accessing over two billion streams a day on the site, YouTube is arguably the single biggest music platform in the world.

A study in January by Midem and Nielsen revealed that streaming was far outstripping downloading for most consumers. It found that while 20% of respondents had legally downloaded music in the preceding three months, 60% had streamed a music video (and YouTube is comfortably the dominant player here). As smartphone adoption increases and 3G networks become more commonplace, such consumption of music videos can only increase.

YouTube is hoping, therefore, that its enormous traffic will open the possibilities for impulse purchases of related content. Services like Shazam are proving that, if an elegant interface and simple service can be developed, a significant number of users will go on to make a purchase. For example, it sees just under 10% of all songs tagged result in a click-through to buy the track in question.

It must also be remembered that this is all happening against a backdrop of years of licensing wrangles and copyright disputes – made all the more heated by the fact that YouTube offers content for free, albeit supported by ads. Both Warner Music and PRS (in the UK) individually pulled their content for several months and only returned it in 2009 when new terms were agreed. Meanwhile in Germany, GEMA is still in the middle of a licensing standoff with the service. And of course, Viacom lost a three-year $1bn [A$0.98bn] copyright infringement suit last year but will appeal the decision.

YouTube is just one part of Google’s broader music ambitions that it hopes will be able to compete with Apple on a relatively even footing. To do that, it needs the ringing endorsements of labels and artists. The YouTube Merch Store, therefore, should be understood as just the latest plank in its overall music strategy.