youtube

YouTube’s subscription video service is not a rumor any more: The company recently sent out a mail to YouTube Partners (content creators) that mentioned viewers will soon be offered an “ad-free version of YouTube for a monthly fee.” The mail also mentioned that the new paid offering will generate a new revenue stream to supplement advertising revenue. This was first reported by Bloomberg. Read the full text of the mail below.

It’s not clear how much YouTube wants to charge for this service, but it’s worth noting that YouTube’s 5 month old music streaming service YouTube Music Key charges $10 per month after a free trial period and also offers offline playback.

This is great news for YouTube addicts, but not so great news for the content creators on the platform. They essentially have no option but to accept the new terms presented by YouTube, and in return will receive a percentage of the subscription fee paid by users. Will this be enough to offset the loss of revenue from advertising? Note that earlier this year, YouTube had banned the use of graphical title cards, which includes the use of sponsor logos and product branding in videos, unless the sponsor pays Google to advertise on a particular channel.

Our Take

Yes, YouTube ads can be annoying (very annoying). But will users agree to pay say $10 just to remove ads from the equation? Aren’t we happy just skipping our way through them? More importantly, will it be viable for multi-channel networks (MCNs) to continue investing in creating original content if advertising revenues are out of the picture? It might be if the percentage of the subscription fee paid to MCNs is high enough. YouTube’s subscription video service can only be considered a competition to Netflix, Hulu and HBO Now among others, if it can offer enough original content (YouTube Rentals doesn’t count). MCNs and YouTube Stars are the primary source of original content on the platform, who in turn depend on sponsors and in-video product branding.

Full text of the email (Source):

YouTube video subscription