YouTube signs licensing deal with Merlin

UPDATE: Dan Nevin, AIR CEO has release a statement following YouTube and Merlin's partnership:

“Although the recently announced YouTube subscription based service is likely not to hit Australian shores until 2015, AIR is pleased that YouTube has recognised the importance of including independent music on the service prior to launch. The independent sector accounts for around one-third of all streams on legitimate services in Australia, so it’s obvious that the indies involvement will benefit all parties involved."

YouTube signed a licensing deal with global independent rights agency Merlin in the lead-up to the announcement of its subscription feature, designed to compete with streaming powerhouses like Spotify and Rdio.

The deal, first reported on by the Financial Times, came after a lengthy courting process that saw indie label trade groups initially reject YouTube’s terms, citing their inferiority to ones presented to the three majors, Sony, Universal and Warner.

One of the most criticised terms, according to the labels, was a “negative most-favoured nations” clause that would give YouTube the right to reduce royalty rates for all labels should one of them happen to accept a lesser deal.

There have been no details given regarding the new partnership between Merlin and YouTube, aside from the latter saying that “hundreds of major and independent labels are already partnering with us.”

Despite little available information available regarding the new subscription service, it is expected that it will include high quality audio and the option to save videos offline. It is also speculated that it might also be linked with Google Play Music All Access.

With YouTube’s advertising revenue expected to reach US$7.2 billion, the company is intent on exploring the addition of paid subscriptions. When Susan Wojcicki, the chief executive of YouTube, was questioned about the planned music service at Code/Mobile, a conference presented by the technology news website Re/code, she simply stated, “we’re working on it."