By increasing the number of paid users, I assume we mean that we want to increase the % of DAUs who pay for YT Music.

First, we need to understand the Youtube Music play here.

Youtube Music was carved out of Youtube because Spotify and Apple Music were getting popular. Users were listening to music on Spotify instead of on Youtube, threatening ad revenue for Youtube. Therefore, Youtube Music was born as a standalone app, where users could listen to the music ad free from anywhere anytime.

Increasing the number of paid users is to increase the overall Youtube revenue.

We can increase the paid users in the following ways:

1. Entering new markets: Emerging markets such as India provide a good target market because of the sheer population and internet penetration. However, Youtube Music comes with videos, which could take up internet bandwidth for users when they stream music. Youtube Music could build a video free, low bandwidth requiring app, which is optimised for emerging markets.
2. Value for existing customer segments: Youtube has two users: users and music creators. If users see more value in Youtube Music, more users may subscribe. Music fans want to interact with music creators, and there is no way to do that today. YT Music can provide a way to request for call/interactions with their music idols, and music idols can be be provided compensation for their time ( per hour basis) by users. Given that creators have official channels on YT, YT is in the best position to do so. Risks include harassment for creators. YT Music could provide an option for creators to report such users.
3. Partnerships: YT Music can be the default app for music on Android phones.
4. New platform support: YT Music can also be developed as a TV app for Roku and other Smart TVs.
5. Promotions: With Google Nest devices/google hub purchase, users could get extended free trial for YT Music

Prioritisation:

3 and 5 options are attractive because of ease of implementation

Between 1, 2 and 4: 2 can have the biggest impact given other competitors dont offer such an experience, so would prioritise 2.

Metrics:

Measure whether paid subscribers are increasing: % of DAUs who are paid subscribers

Measure whether users are signing up for idol interaction: % of all paid subscribers that are requesting for interactions

Measure whether users are able to personally interact with idols after signing up: % of all user initiated requests that get fulfilled

Measure the reporting calls: % of all interactions that end up getting reported

Thank you for the question, I had a few clarifying questions

1. What is the objective? – To grow revenue
2. What is the time period – Let’s say the next 1-2 years

Thank you, I would like to begin by reviewing the following 3 pillars

1. Landscape

• Customer: Youtube Music is a two-sided platform i.e., we have content creators and content consumers. I think here we are planning to focus on content consumers. (Can segment further if asked)
• Product: Today our product is more or less similar to the existing competition and substitutes are available. The barriers to entry are low in the industry and pricing power is low as well.
• Competition: Spotify, Gaana, and Apple Music occupy most of the market we currently have a low market share which we need to review and think about. Gaining paid more users means capturing market share.
• Company: Alphabet is a conglomerate company that has a product mixture of Google Ads and services, Google clouds, and other bets. A potential can be to review our existing services and cross-sell experiences there.

1. Pricing Strategies

• This can be done in broadly 3 ways (Cost-based pricing, Competiton based pricing, and value-based pricing). I do believe we can think about re-evaluating prices if required to increase volume and can follow one of the models. (Can explore each strategy if required)
• One way is to also lower prices on a yearly basis to gain market share and that can help have more users.

1. Organic growth strategies

• Cross-sell: Whenever the user is on any Google property and is referring to music related event (search in Google, search for Music in Google assistant so on and so forth) we need to show them the benefits and cross-sell Youtube Music onto bigger platforms which have billions of users.
• Bundling: We can partner with a local telecom, or mobile company to go forward and include Youtube Music for free/ we can also offer a bundled service of Youtube Music with Google One.
• Upsell: Users who are already on Google One, are loyal users we can even go forward and upsell to those users to add Youtube Music at a very nominal fee.
• Increase Distribution Channels: Can you stream Youtube Music through your glasses/in the air we need to be able to differentiate since if we review a value chain of the Music Industry (Supply > DC > Customer Demand/Pull) it’s all similar even for competitors.

1. In-organic growth startegies

• Look at acquisitions for vertical and horizontal integration, maybe we can acquire Spotify need to review financial metrics for the same. This will help us gain market share as well.

YouTube Music is a streaming music service that allows you to listen to songs, watch music videos, get recommendations, and access unique content (e.g., live performances), all ad-free on both desktop and mobile and with the screen locked (i.e., you don’t have to be viewing YouTube actively).

I’m going to assume that we’re looking at increasing total number of subscriptions versus total subscription revenue (which could come from shifting lower-tier subscriptions to higher-tier ones), or total users on a paid plan (which, in case of a family plan, could have multiple paid users per single subscription). I’m going to assume that this is across all geographies and all platforms.

I’ll start by thinking about why people access YouTube for music, period, whether paid or not.

1. Required for professional use
2. Preferred for personal use
   1. Best service wrt availability (e.g., geo)
   2. Like its unique features (e.g., catalog, social commenting)
   3. Cost (i.e., free)

When you think about these segments, I’d evaluate them based on a) likelihood to convert to paid and b) likelihood of becoming paid users without new initiatives.

Segment 1 is likely to convert to paid, but they also are likely to do so without additional initiatives, so let’s not double down on them.

Segment 2c is unlikely to convert to paid, so let’s ignore them.

Segments 2a and 2b are both areas of opportunity. However, Segment 2b interests me more because it builds on the core value prop of our product, versus geographic arbitrage. Plus, users in geographies not served by competitors may be geographies w/ low ARPU and ability to pay (though not necessarily).

Let’s focus on segment 2b: people who come to YouTube for music because they find its features unique.

Here are some reasons they could find it unique:

• Video: the medium is inherently visual here, versus audio-only
• Catalog: there’s stuff here that’s missing from the other streaming services
• Social: you can comment on YouTube and dialog back and forth, including with artists and creators themselves

Since not having to have video up is a value prop of the service, let’s not focus on the folks who come for the videos in the first place. Catalog could be interesting, but my hypothesis is that it’s highly fragmented, a long tail: a single initiative isn’t going to make a big change, it’s likely hand-to-hand combat getting more content from niche musicians on the platform.

Doubling down on social would appeal to users of all those various segments, so it seems like it offers higher returns.

Some ideas could be:

• Special commenting: being able to comment on videos where comments are disabled
• Higher ranked comments: your comments show up top as compared to everyone else’s
• Exclusive messaging of artists: the ability to message artists directly, whether on their profiles or during live events (like an AMA)

The last feature feels promising, because it gives users the ability to not only “speak” but to be “spoken back to” in a way that they wouldn’t if they didn’t have the paid service. It feels like exclusive access. It also has the benefit of being a highly visible perk: all users, paid or not, will see the paid users getting access to artists, thereby driving hype of the subscription.

I’d explore this option’s feasibility through user research to confirm (or disprove) my hypotheses on what people come to YouTube for and segments’ willingness to pay. If this research was positive, I’d sketch a plan for execution in tandem with engineering and design, measuring success by such metrics as:

• Total subscriptions to YT Music (northstar)
• Engagement of subscribed users (sessions per day, length of sessions, content streamed per session)
• Churn

Some tradeoffs to my approach are the higher level of feature build, compared to a BD-centric approach of building out the catalogue further. It also depends on the assumption that unpaid users will attend the same events as paid users and see and envy their ability to message artists directly; they might be unaware of the events or not want that ability at all.