YouTube Without Ads? Introducing the New Subscription Service, YouTube Red
On Wednesday, YouTube announced YouTube Red, a service that will allow subscribers to watch YouTube without ads. They also introduced YouTube Originals, which will be original program only available through the paid service.
YouTube Red will cost $10 a month. Content creators will start work on YouTube Originals early next year.
YouTube generates billion of dollars of ad revenues, as does its parent company Google. So why cut ads out of the viewing experience for a subscription price?
"People are embracing paid subscriptions for ad-free content at an incredible pace," said Robert Kyncl, the chief business officer at YouTube, as part of the announcement.
"Mr. Kyncl also gave some updates on the company's ad business, noting that the number of advertisers running campaigns on YouTube was up 40 percent over the last year and that the top 100 advertisers had increased spending by 60 percent," according to a New York Times article by Conor Dougherty and Emily Steel. "Google continues to make the most of its revenue from advertising on its search engine, but it is now hoping to use its fast-expanding catalog of YouTube videos and music services to start bringing in subscription revenue as well. The service, which begins next week, will work across the original YouTube as well as YouTube's gaming app, its forthcoming music app and Google's Google Play music service."
According to the New York Times article, YouTubeis the most popular video service in the world and its annual ad revenue is between $5 billion and $10 billion. YouTube's market share in relation to television is expected to keep growing. This year, television viewership in the U.S. was down 11 minutes per day per person, while watching video via digital screens is up 10 minutes per person per day.
"YouTube executives said they were introducing a subscription service in part to give a new revenue stream to the Internet-famous "creators," the most popular of which already make millions of dollars a year in advertising revenue," according to the New York Times article.
Why subscribe to YouTube Red? There will be some extra features such as the ability to download videos and watch them offline. And, of course, the exclusive content that will begin next year.
"In addition to YouTube originals, the service will include a roster of programming from big media companies like 21st Century Fox, NBCUniversal and Time Warner that are already on the ad-supported version of YouTube. The media companies will get about 55 percent of the revenue from the service, said executives with knowledge of the terms," according to the New York Times article.