YouTube has had an enormous impact on the net over the years and is by far the most popular site for short videos of virtually every type imaginable, but Google has worked in vain to leverage the popularity of the site into a money maker. At best, YouTube barely breaks even on costs versus income. But Google hopes to change that with the introduction of their new subscription service called YouTube Red. For a $9.99 monthly fee, YouTube Red will allow you to watch videos ad free, and will eventually add premium videos that will be unavailable to anyone else. The monthly subscription also gives customers access to YouTube Gaming, YouTube Kids and the newly announced YouTube Music service. The launch date for YouTube Red is October 28th in the US, and will expand to other countries soon after.
The new service does have a major catch to it however. The $9.99 fee applies to most devices, including those that run Windows, Android and Linux, but if you purchase a subscription through the in-app purchasing of Apple’s iOS, you will pay $12.99 instead. Apple takes a 30% cut of all subscriptions on its platform, and Google is passing on this cost directly to the consumer. You can bypass this premium by avoiding purchasing the service through Apple and simply buy it directly from Google.
Content creators will receive the “majority” of income generated by their videos, but Google will not disclose the exact percentage. The most popular channels on YouTube are being forced to join YouTube Red. If they choose not to participate, Google intends to hide their channels from public view. Chief Business Officer Robert Kyncl stated, “99% of content consumed on YouTube will be still available”, and he pointed out that the vast majority of the media creators signed onto the program. But Google didn’t give them much leeway. If they chose not to participate in YouTube Red they would lose both the ad revenue from their old arrangement with YouTube, the new subscription revenue, and lose their connection with their established audience.
It seems that Google intends to follow NetFlix’s example and start producing their own, original content. This new material will be called “YouTube Red Original Series,” and they intend to promote video from already established stars on YouTube. A new series called “Scare PewDiePie” will debut sometime next year. (No, I did not make that up.)
The biggest problem Google faces with this endeavor is changing the attitudes of their users. YouTube has been entirely free to watch, albeit with ads, and getting people to shell out ten dollars a month for something that they have been doing for free may be more of a challenge than they can overcome. Most will simply continue to watch the free/ad supported sections and ignore the new service unless there is something extremely compelling created for YouTube Red alone.
You can read the announcement by Google at their YouTube Red Blog.