Google Inc.’s (GOOGL) YouTube finally rolled out its much-awaited Music Key subscription service. The new service marks Google’s entry into the increasingly populated music subscription business.
YouTube Music Key
The new service will let subscribers use the YouTube phone app to watch music videos and listen to songs without any ad breaks. Launched at an introductory price of $7.99 a month, the music keeps playing regardless of what applications subscribers use. Subscribers can listen to music even if they lose their Internet connection. The music can also be saved on the subscribers’ phone.
YouTube Music Key opens to beta testers next week and to the general public at some future date, which is yet to be determined. The introductory price eventually could go up to $9.99, the same as Google’s existing Play Music service.
Music Key will offer subscribers access to the entire Google Play catalog. This comprises a large selection of both audio and video content. That’s not all. There are also plenty of playlists available, and subscribers can listen to or watch videos on compatible services like Sonos and Chromecast.
As a part of the new subscription service, big music labels like Universal, Sony and Warner have reached licensing deals with YouTube. Besides these, hundreds of independent labels are also onboard. Financial details of the deals haven't been disclosed.
Music Key is going up against Apple's (AAPL) iTunes and Beats music, Spotify and Amazon.com's (AMZN) Prime Music service. And the competition is not far behind. Apple is said to be negotiating with big record labels to offer subscriptions through Beats (which it acquired in May) for $5 per month.
It is worth noting that Google’s YouTube allows artists to spread out the release of songs from an album. Spotify, on the other hand, requires the entire album to be posted at once.
Due to this inflexibility, Taylor Swift, a major pop star, recently pulled all her music off Spotify after the launch of her latest album “1989.” On the other hand, the video of her new song “Blank Space” on YouTube attracted around 18 million views in less than three days.
Going Forward
The launch is limited to the U.S., Spain, Italy, Finland, UK and Portugal as of now. It is available by invitation to only a few users that YouTube deems to be heavy music listeners. These lucky users get 6 months of the service free.
Google currently has a Zacks Rank #4 (Sell). Investors can also consider Mercadolibre, Inc. (MELI), which holds a Zacks Rank #1 (Strong Buy).
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