The video behemoth looks to compete with Spotify.

YouTube is preparing a premium on-demand music service to launch later this year, and according to several sources familiar with the plans it will be akin to Spotify, but with video. The service would have both free and premium tiers, with the latter offering unlimited access to a full catalog of the tracks available via parent-company Google Inc.’s All Access subscription music service. The premium service could also include the ability to listen to music offline and remove ads.

However, the free tier could also be unlimited access as it appears YouTube’s primary goal is to continue to amass ears and eyes to its mobile platform, selling more ads. In addition, there are strategic reasons for developing a premium music video service: having a paid tier would give YouTube more flexibility in packaging and selling music, possibly with an eye (no pun intended) to future synergy with Google Glass.

“We’re always working on new and better ways for people to enjoy YouTube content across all screens, and on giving partners more opportunities to reach their fans,” a YouTube spokesman said in a statement. “However, we have nothing to announce at this time.”

Set to join a crowded field of Spotify, Pandora, Apple’s iPod Radio and Google Play Music All Access, among others, YouTube’s biggest hurdle in this move forward is going to be their ability to offer something better than what they already do. They’ll need to justify a monthly fee of around $10, opting as a better alternative to using YouTube as a free, on-demand jukebox; searching for, and finding, official music videos of major releases.

One major feature is said to be the availability of album streaming, while a second potential premium feature would be offline cacheing of songs and videos so users can listen on their mobile devices even when they’re not connected. Finally, the removal of ads would almost certainly be a feature in the premium offering, sources said.

Would you use YouTube to stream an album? Or are there already enough services like this?

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via FACT & Billboard