YouTube Launches 8,500-Won Premium Plan Without Music... Will the Music Streaming Market Restructure?

The domestic music streaming platform market, which has seen increasing influence from foreign platforms, has reached a new turning point. This comes as YouTube has decided to introduce a new subscription plan that excludes its music streaming platform, YouTube Music.

According to the IT industry on February 2, YouTube began the phased rollout of the "YouTube Premium Lite" plan in Korea starting January 30. This plan is a version of the existing YouTube Premium that excludes YouTube Music, and it offers ad removal, background playback, and offline storage features. However, music content and Shorts videos will still display ads as before, and the storage feature is not supported for these. The YouTube Music app is also not available under this plan.

Features of the YouTube Premium Lite Plan. Provided by YouTube

The price of the plan is 8,500 won per month for Android and web users (10,900 won per month for iOS in-app purchases). This is up to 6,400 won cheaper than the existing YouTube Premium (14,900 won per month) or YouTube Music Premium (11,990 won per month). Since domestic platforms offer music streaming services for a monthly fee of 6,400 won or less, there is now room for users to consider switching to other services.

YouTube's decision to launch this product in Korea comes amid controversy over the so-called "bundling" of YouTube Premium. The Fair Trade Commission began an investigation, seeing YouTube's bundling of Music with the Premium plan as limiting consumer choice. In response, YouTube prepared a consent order that includes launching this Lite plan in Korea. Previously, YouTube introduced the Lite plan in major countries such as the United States, Japan, and the United Kingdom. In those countries, the Lite plan does not support background playback or video downloads.

With YouTube, which had rapidly increased its Premium subscriber base through YouTube Music, now offering a new option, domestic music platform providers see an opportunity to regain market share.

Currently, foreign platforms account for more than half of the domestic music platform market share. According to WiseApp, the average monthly number of users of the YouTube Music app last year was 9.8 million, the highest among all platforms. Spotify also secured 3.85 million users by promoting its free, ad-supported plan. Combined, these two apps command a 52% market share. In contrast, Melon, which was previously the dominant player (6.34 million users), has been pushed to second place by YouTube Music, and Genie Music (2.57 million users) has ceded third place to Spotify. FLO (1.73 million users) and Vibe (810,000 users) are also experiencing a decline in user numbers.

Domestic platforms that have lost ground in the competition are currently undergoing restructuring to survive in the music market. SK Square sold Dreamus Company, the operator of FLO, to BeMyFriends, while NHN sold NHN Bugs, which operates Bugs Music, to NDT Engineering.

However, some believe that the impact of the Lite plan's launch may not be felt immediately. An industry insider from the music platform sector commented, "Since the YouTube Premium Lite plan is offered at a reasonable price, there will certainly be some benefits for domestic platforms as users switch over." However, they also noted, "The 'lock-in effect,' where users tend to stick with the platforms they are already using, could be a variable that influences the outcome."