Are YouTube’s viewers ready to pay to avoid its ads?
The world’s biggest video site will find out in a week when it launches YouTube Red, a subscription service it calls “the ultimate YouTube experience.” For $9.99 per month, U.S. viewers can watch all of YouTube’s content ad-free, play videos while using other apps on their phone and save videos for offline play. The service is $12.99 per month for people who sign up through iOS because Apple AAPL -0.87% charges an extra fee for in-app purchases.
The effort is part of a long and winding journey toward getting users to pay for YouTube. The site launched a YouTube Music Key beta last year that promised to give users many of the same options — background and offline playing — for YouTube’s vast music catalog, but this expands the access to all videos, not just those deemed as music.
YouTube is sweetening the subscription deal with original content from its most popular creators. Top creators like PewDiePie, the Fine Brothers, Lilly Singh and Joey Graceffa are debuting high-production videos and shows that are only available on YouTube Red. Original content is coming “early next year,” the company said.
YouTube will pay creators to make some of the original content that is going to be promoted as part of YouTube Red. The company said a year ago that it would pay its top creators to make videos, but didn’t say until now that that content would be used to draw viewers into paying for a premium service. YouTube has faced worries that its star creators will defect to other sites that pay them more.
Robert Kyncl, YouTube’s chief business officer, emphasized at a press conference Wednesday that the subscription service, which will share revenue between YouTube and creators, will create a “brand-new revenue stream” for YouTube stars. Creators will be paid from the pool of subscription revenue based on how much time paid users spend watching their videos. And YouTube is serious about making sure the paid catalog is complete: if creators do not agree to put their content on the subscription service, their ad-supported content will be made private on YouTube in the U.S.
A YouTube Red membership will also get users access toGoogle GOOGL -1.19% Play and vice versa. “You can think of those two as completely interchangeable,” Kyncl said. “Hopefully you’ll like that value.” YouTube Red members also get access to YouTube’s new music app, which will becoming “later this year” and will allow users to organize, access and discover new music that’s already on the site.
The site has dabbled in paying for professional-level content before, working with big-name stars like Sofia Vergara andAshton Kutcher in 2011, though that effort did not last. This time, the focus is squarely on YouTube’s homegrown stars, who often have fervent fanbases.
“There’s so much variety in what people watch today,” said Susanne Daniels, the site’s new global head of original programming. “I came to Youtube because I see that incredible diversity of content on this platform.” She added that the premium content caters to “a new generation of fans.”
YouTube’s service will have to prove itself worthy of monthly subscription dollars in a world with Spotify, Netflix NFLX -3.70%and other options. “Paid membership is a really hard business to be in,” Kyncl said. “We focused on the most desired features we heard from our audience. … Every subscription service goes through an evolution, and we’ll learn.”
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