YouTube to launch ad-free subscription service 'Music Key' to monetise its content library

Upon its release the service will be available on Android and iOS devices, capable of running in the background while other programs are in use.

Subscribers will also have access to Google Play All Access allowing users to download unlimited songs from the service. The app will only be available to beta testers over the next few months.

The move into streaming is vital for the firm as it tries to find a way to further monetise its video library. Research from eMarketer estimates that over half of US smartphone users (83.8 million) will listen to music via streaming or direct download in 2014. Many of these mobile owners will be attracted to YouTube's service which boasts over 20 million official videos, album tracks, concert clips, covers, and remixes.

Paul Verna, a senior analyst at eMarketer, said: “Freemium models combining free ad-based access and fee-based subscriptions have become the norm in digital media -- Spotify, Pandora and Hulu come to mind - and there's no reason Google can't do the same with YouTube.

"While advertising will remain by far YouTube's largest revenue source, there's a significant opportunity to capitalise on behaviours of its existing user base to create additional monetisation."

The move into freemium subscriptions will help YouTube diversify its revenue stream which this year will pull in around $7.2bn earned in ad revenues alone.

In March, Google confirmed to the Drum that it was indeed developing a new streaming service to combat the likes of Spotify.