The company has been negotiating a deal with Universal and Sony from a year ago. Talks with Sony and Universal, as well as Merlin-which represents hundreds of independent record labels-are apparently underway.
In April, Spotify had already signed a global licencing agreement with the Universal Music Group.
Music streaming companies Spotify and Tencent have taken minority stakes in each other's businesses.
Up until now, the music viewing features on YouTube have been mostly free and offering them at a price may present some challenges ahead.
None of Google's previous offerings really caught on with consumers, while its rivals saw healthy growth.
As of July 2017, Spotify reported over 60 million subscribers worldwide for its service, which is available in 61 countries.
While the music industry thought that YouTube Red was initially developed with the vision of promoting the talent of aspiring artists but with the passage of time, the platform became an arena for original series like the reboot of "The Karate Kid".
It is interesting to note how YouTube will market its service.
The new service, which is said to be known internally as Remix, would act as a mash-up of the two, being predominantly audio-only, but with access to video clips, much like the other two big music streaming giants. In corporation with the Google Play Music services, YouTube is going in a new direction. Spotify's approach to China echoes that of other USA technology companies, including ride-hailing companies and cloud computing services, which have ultimately had to rely on local partnerships to operate.
YouTube recruited former Warner Music's executive Lyor Cohen to supervise its music operations in 2016. Well, it's not entirely clear, but TME CEO Cussion Pang said that they will work toward exploring "collaboration opportunities, with a common objective to foster a vibrant music ecosystem that benefits users, artists and content owners".
Streaming services such as Spotify and Apple Music have been major contributors to the recovery of the music industry after two decades of declining revenues.
Google is getting ready to launch its new music subscription service under YouTube 's brand in march, according to a new Bloomberg report.