In a move that was not entirely surprising to those in the industry, YouTube announced on Oct. 21 a Netflix-like subscription service called YouTube Red, which became available today. The service will cost $9.99 per month and will come with three main benefits: removing the ads in all YouTube videos, allowing users to save videos for offline playback and enabling background audio for its smartphone apps. It will also come with a complementary subscription to Google Play Music, Google’s less popular competitor to Spotify.
This follows a larger transition to subscription-based services, in place of one-time payment options. In the past decade, consumers have learned to click the “subscribe” button for products ranging from movies to cars to photo editing software. When a company switches to such a model, there is usually some pushback from its current users, but companies such as Adobe have shown that subscription offerings broaden the appeal of the company’s products by lowering the barrier to entry. Additionally, businesses generally benefit from the stable, recurring revenue that comes from subscriptions, but must adapt their sales and marketing departments.
Of course, YouTube has until now been completely supported by advertisements, so the transition is a bit different. In addition to getting consumers to sign up for its new service, it has had to sign new contracts with its millions of independent contributors that upload videos to YouTube. Evidently this process of winning over the creators of more than 98 percent of the content watched on YouTube was difficult, and there has already been a high profile casualty: ESPN. Though ESPN’s parent company, The Walt Disney Co., signed the new YouTube contract, other rights issues prevent ESPN from hosting its content. Attempting to go to ESPN’s YouTube page today returns the message “This channel has no content.” It is unclear if ESPN content will return to YouTube.
In addition to the content that is already available, YouTube announced YouTube Originals, which will be a collection of original programming that will only be available to paid subscribers. This is, perhaps, the announcement that worries current users the most, for stars such as PewDiePie will be producing content that will not be available to users who decide to forgo subscribing for $10 a month. Considering YouTube’s stature as the place to watch free videos, this is definitely a valid concern, but the threat is not immediate: it will take many months to produce the videos that will reside behind the paywall.
Though the idea of an ad-free YouTube is alluring, the confusing split between YouTube’s music catalogue and the paired Google Play Music service might turn off some subscribers. Additionally, it is unclear if the benefits of YouTube Red are enough to convince casual users to pay $10 per month. As it stands, users can skip ads by turning on an ad blocker, play videos offline by using legally-questionable sites to download YouTube content and play YouTube videos in the background natively on computers. Ultimately, only time will tell if YouTube Red is successful.