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Music streaming subscriptions are free x rated movieson the rise, but YouTube isn't intimidated.

The video giant reported Tuesday that it paid out $1 billion to the music industry based solely on advertising. In a blog post titled "A billion reasons to celebrate music on YouTube," the company elaborates on why the music industry should embrace advertising and subscription models for digital services.

YouTube is one of several digital services that is contributing to the rise of revenues for the music industry, which has suffered from a decline over the last decade.

The company has faced criticism from labels and artists for not paying enough in royalties. British music industry body UK Music reported that per-stream rates fell from $0.00020 to $0.0010 from 2014 to 2015. Artists including Nelly Furtado have been vocal about fairer pay. Other services like Apple Music have received praise for improving their relations with artists.

Over the last year, the competition has dramatically increased among subscription services. Of course, there's Spotify and Apple Music. This fall, several more options were introduced. Recently, iHeartRadio, which owns 850 radio stations, added two subscription services after announcing them in September. In October, Amazon launched an on-demand service for Prime members.

YouTube does offer a subscription model. With YouTube Red, customers have access to ad-free videos and music for $9.99 per month, similarly priced to other options.

The company said it expected a bright future for itself with more dollars shifting from TV, radio and print to digital.

"In the future, the music business has an opportunity to look a lot like television, where subscriptions and advertising contribute roughly equal amounts of revenue, bolstered by digital and physical sales. To achieve this, there is a lot of work that must be done by YouTube and the industry as a whole, but we are excited to see the momentum," the company wrote in the blog post.