The multi-billionaire corporation Google headquartered in Googleplex Mountain view California made revenue of $59.825 Billion in 2014. The company’s revenue has been consistently increasing every year. The mission statement of the company is to organize World’s information so that it can be useful and accessible universally. The company offers a number of high quality services and products including search engine, cloud storage service or Googledrive, Google Inc. (NASDAQ:GOOG) docs and desktop, photo editing instant messaging and web browsing. Apart from these Google has already made hundreds of millions of revenue on its latest Android Lollipop operating system. The company has also produced Nexus tab series and other communication electronic devices. In 2013 Alexa declared Google as the most visited site on the internet.
Google is greatly shifting its focus to communication devices and other sources of revenue other than advertising. This is where YouTube becomes extremely important for the company. YouTube has been one Google’s biggest acquisitions. The video streaming platform recently made a deal to license music from thousands of independent record labels represented by the rights agency Merlin.
According to unknown sources the deal was finally struck after months of bitter negotiations. Independent labels, which represent artists such as Adele, were holding out for a better deal from YouTube. The deal was finally made after YouTube threatened to take down music videos of artists like Adele and the Arctic monkeys if its demands were not met.
The agreement has eventually enabled the Google owned company to launch a paid for music service, which will compete with Apple’s Inc beats, France’s Deezer, the Swedish streaming service and renowned Spotify. According to a music analyst the deal will greatly benefit Google Inc. While YouTube’s competitor spotify recently jumped up by 25% to $50 Million in the past six months; therefore it was important for YouTube to find something for itself.
This deal will have a great impact on the music industry and the multibillionaire Google Inc, as YouTube plans to launch its service within weeks according to the analysts. The service will allow users to pay a monthly fee for watching music videos without any advertisement interruptions, which is an interesting step considering Google dependency on ad revenue. However this would help Google in finding other revenue sources apart from advertising, but only if YouTube manages to convert a large number of its 1Billion monthly users to paid subscribers.
Analysts have already indicated that the deal will generate revenue of $500 Million within the first year. This deal will also change YouTube’s image from a free video sharing website to only a money making website in the music industry. The company had already signed deals with Universal, Sony and Warner; now with Merlin YouTube gets access to its 20,000 original labels. Merlin also includes XL recordings, which include artists like Adel, The xx and Domino, the label behind and the Arctic monkey.
Now it will all depend on how many YouTube customers will pay for the upcoming videos and music. Google Inc. (NASDAQ:GOOGL) would closely follow the proceedings following the deal because it will give the company a strong foothold in the music industry as well.
