YouTube to Launch $10-a-Month Ad-Free Video, Music Plan Red

22 Oct 2015 | Author: | No comments yet »

Google Introduces Ad-Free YouTube Subscription.

LOS ANGELES (AP) — YouTube on Wednesday unveiled a new $10-a-month subscription plan in the U.S. called Red that combines ad-free videos, new original series and movies from top YouTubers, and on-demand unlimited streaming music. LOS ANGELES—Google Inc. is rolling out an ad-free subscription service, YouTube Red, along with a host of original programming to lure paying subscribers to its massive YouTube platform.

Robert Kyncl, YouTube Chief Business Officer, speaks as YouTube unveils “YouTube Red,” a new subscription service, at YouTube Space LA Wednesday, Oct. 21, 2015, in Los Angeles.YOUTUBE has announced a new paid-subscription service that will eliminate advertisements as the video service behemoth looks to better tap its vast commercial potential.

Google’s YouTube unveiled a paid version of its video-sharing service, giving parent company Alphabet Inc. a way to generate profit from online entertainment while ramping up competition with Netflix Inc. and other content sites. Red builds on Google’s existing music streaming service by providing ad-free access to YouTube programming, along with features such as the ability to download videos to mobile devices and have music playing in the background while using other mobile apps. YouTube, which is owned by search engine giant Google and claims more than one billion users worldwide, also announced on Wednesday an expanded music platform and original movies in a bid to encourage subscribers. Today YouTube confirmed that any “partner” creator who earns a cut of ad revenue but doesn’t agree to sign its revenue share deal for its new YouTube Red $9.99 ad-free subscription will have their videos hidden from public view on both the ad-supported and ad-free tiers.

Red targets YouTube fans who want to skip ads, while giving them a chance to pass along some cash to their favorite video creators, who’ll share in the new revenues. Google will try to persuade people to pay for a service they already get for free by eliminating advertisements and permitting subscribers to save videos for offline viewing. The plan, which launches Oct. 28, includes exclusive access to new videos launching next year as well as the YouTube Music Key service — to be called YouTube Music after it launches later this year — for music videos and songs.

YouTube Red differentiates YouTube from ad-supported rivals like Facebook Inc., and brings Google more directly into competition with paid streaming services from Netflix and Hulu LLC. Though turning existing fans into paid subscribers instead of free viewers could earn creators more than the ad revenue, forcing them into the deal seems heavy-handed. Google says the goal is to offer consistency, so people thinking about subscribing to Red don’t have to worry about their favorite content not being available in the ad-free service.

But you don’t have to wait for the new music app to have Red features work across YouTube platforms, with the exception of the YouTube Kids app, starting next week. But there’s no explanation why it couldn’t just flag videos of those who don’t sign the deal as “Not On Red”, and instead had to go with a sign-or-disappear strategy. The subscription price for Apple users is more expensive because Apple charges app makers a 30% fee on in-app purchases such as subscriptions, a Google spokeswoman said.

While YouTube is notorious for its chaotic array of videos, YouTube Music—to launch at an unspecified date later this year—will function much like a streaming platform, with organized channels that provide videos of each artist. YouTube has long come under fire from the music and other creative industries, who say that artists are rarely compensated for content uploaded from non-official sources. For Google, the service opens up a new revenue stream while appeasing content partners such as record companies, who are counting on subscription streaming revenue to stay afloat, as CD and download sales decline.

YouTube is the most popular access point for music in the world, but record companies collect far less revenue from ad-supported streaming services than they do from paid services run by Spotify and Deezer, according to a recent report by the International Federation of the Phonographic Industry. Record company executives have frequently complained that free, ad-supported music services such as YouTube don’t generate enough revenue to sustain the music industry in the long term, and some are frustrated that Google has taken so long to offer the paid YouTube service. Spotify remains the leader in music streaming, but newcomers Apple Music and Tidal have sought to win over users in part by highlighting video content.

YouTube still intends for advertising revenue to remain its core business, and executives say they believe it could take a while for paid subscribers to grow significantly, but consumer appetite for ad-free experiences is booming. Kyncl says YouTube will pay out “the vast, vast majority of revenue” to creators, but he repeatedly refused to detail what that percentage would be. Google will soon have to make fresh licensing deals with record labels to use their music on the new service, as at least some of its rights expire early next year. Ad-blocking software has become popular on personal computers, and Apple’s iOS 9 operating system update last month allowed ad-blocker apps to run on its mobile Safari browser for the first time.

Worldwide usage of ad blockers rose 41 percent last year to nearly 200 million people, according to PageFair, a firm that seeks to counter ad blockers. But its subscriber base is much smaller than the 20 million subscribers paying for Spotify AB and the 6.5 million subscribers paying for Apple’s three-month-old Apple Music, according to people familiar with the matter. Lilly Singh, a Canadian comedian and motivational speaker who has won a following under the YouTube name Superwoman, will star in a movie entitled “A Trip to Unicorn Island.” Other programming will include a singing contest called “Sing It!” and a romantic drama, “Single by 30,” by Asian American filmmakers Wong Fu Productions. Internet radio giant Pandora Media Inc. made $54.6 million on subscription and other revenue in the quarter through June, mainly from its $5 a month ad-free plan, Pandora One. Kyncl said the subscription will bolster YouTube’s revenues and that of artists, and said $10 a month is the upper limit of what consumers would pay for such a plan.

Hulu launched a “No Commercials” plan in September for $4 more per month than its regular $8 subscription, and TuneIn added a premium tier for $8 a month in August that throws ad-free music together with audio books and sports play-by-play coverage. Some of those series will be exclusively available to subscribers of YouTube Red. “The YouTube that you know and love continues to thrive,” Kyncl said. “YouTube Red marks an evolution in our desire to give fans more choice and features that they love.” CEO Tim Cook told a technology conference this week that Apple Music has 6.5 million paying subscribers and millions more still on free trials following its launch at the end of June. However, I’ve received unconfirmed word from YouTube that isn’t exactly how it works, so stand by regarding what this means for Play Music rights holders. For instance, subscribers will have access not just to the same 30 million-song library that they do on Spotify and Apple Music, but also to an easily searchable database of each artist’s music videos, live performance videos, covers, remixes and other unofficial versions of their songs.

App users get a 14-day free YouTube Red membership without entering a credit card number, and can extend their trial for an additional 30 days after entering credit card information. Google has been criticized before for using its massive reach inappropriately, especially around how Google+ and Google Places have received priority in search results. Now it’s clear that YouTube is prioritizing what it calls a “consistent” user experience where content is always available in its free and paid service over the wishes of the content owners themselves.

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