The race between the tech giants has taken a new twist with the announcement yesterday that Google-owned YouTube is set to launch an ad-free premium service. YouTube, acquired by Google in 2006, is the web domain with the second most traffic in the world, according to website traffic data service Alexa.com. In first place is Google itself.
The new service, which will initially launch in the USA and cost $12 a month, or $9 for a music-only version, signals a new twist in the arms race taking place between the world’s tech giants. They are increasingly moving into each other’s traditional territory.
Until now, YouTube’s content generation has been user generated. It is incentivised through a share of advertising revenues generated by the Google AdSense platform and based on a combination of views and clicks. Google acquired the website set up by three early PayPal employees for $1.65 billion in 2006, just a year and 9 months after its launch. The price paid at the time now looks like a snip.
In 2015, Google, in turn part of holding company Alphabet, launched YouTube Red as a subscription service. This can now be considered as a pilot project testing the water for the new YouTube Premium service replacing it. The music-only version of the premium service is to be branded YouTube Music. Its pricing will initially be identical to that of Spotify, whose share price dropped 2% today, presumably influenced by the announcement.
Until now, YouTube has only dabbled in producing its own content. The highest profile example of YouTube proprietary content to date is Cobra Kai, a ‘when they grew up’ reboot of the Karate Kid movies in series format.
Netflix and Amazon have both recently been investing huge sums in creating their own proprietary content as they battle for supremacy of the content and media streaming space. It remains to be seen if Alphabet has genuine ambitions to challenge its two tech rivals on that front by pouring comparable levels of cash into YouTube Premium content but it would seem to be the likely end game of the new service.
The big tech companies are increasingly encroaching into the original territory each started from. Google is making smartphones, Apple has its music and media streaming service, Facebook is developing both search and e-commerce functionalities and Amazon seemingly doing everything from supermarkets to making movies having started life as an online bookstore. They are also all heavily invested in R&D into the latest technology in the world of AI, driverless cars and pretty much every other major tech market.
The battle for supremacy, or rather to not be overtaken and gobbled up by more aggressive rivals, has never been more intense.