Ad-Free Video Subscription Service, YouTube Red, to Launch Wednesday

Last week Google finally announced a release date for its much-anticipated video subscription service, YouTube Red. YouTube Red will launch in the U.S. this Wednesday, October 28, says Business Insider, and users can take it for a test drive for 30 days for free.  

YouTube RedYouTube Red will go for $9.99 a month for the desktop and Android versions and $12.99 for the iOS version. The additional fee is presumably to cover the dreaded Apple tax, a 15 to 30% surcharge imposed by Apple for distributing the app.  

YouTube Red features include: 

  • An uninterrupted, ad-free experience 

  • Ability to save videos and music offline to mobile devices 

  • Ability to play videos and music in the background while using other apps or when the screen is off 

  • Complimentary subscription to Google Play Music 

YouTube Red will also include original content featuring well-known YouTube stars including PewDiePie, Joey Graceffa, Toby Turner and MatPat, as well as other celebrities. In addition, the video streaming site will release original programming, including movies, in early 2016. 

“We’re not focused on what other people do. We are focused on our audience,” said Kyncl in an interview with Popper. “Our approach is focused on our own talent pool…what we’re doing is matching them together with other really experienced producers.” 

For example, YouTube has matched the creator and executive producers of The Walking Dead with PewDiePie to create a new horror show called Scare PewDiePie, a reality-adventure series that features YouTube’s biggest star as he encounters scary situations inspired by his favorite video games, says Business Insider. 

  • I am Tobuscus, a scripted comedy featuring Toby Turner 

  • 360 Project from MatPat of Game Theory  

  • Lazer Team, a feature-length, action-comedy from Rooster Teeth & Fullscreen Films 

  • A Trip to Unicorn Island, a look into the life of Lilly Singh on a 26-city global tour 

In exchange for lending their Internet celebrity and brands to YouTube Red, PewDiePie and other video favorites will receive the “vast, vast majority of revenue” said Chief Business Officer Robert Kyncl during a livestream announcement last week. That revenue will be paid to content creators based on watch time. 

As Ben Popper of The Verge explains, YouTube Red is similar to Pandora, Spotify and Hulu. You can use YouTube for free, if you’re willing to sit through some ads. If you are willing to pay for an ad-free, uninterrupted experience, however, you can omit the ads and take advantage of premium features 

YouTube Red will extend across the brand and be accessible to subscribers when they log on to YouTube or a YouTube app on mobile devices, desktop computers or enabled TVs. YouTube Red will extend to YouTube Gaming and Google Play Music.  

Google Play Music subscribers will receive a subscription to YouTube Red for free. If they cancel their Google Play Music subscription, however, they will lose access to YouTube Red and will not qualify for the YouTube Red free trial.  

For those like us wondering what happened to YouTube’s Music Key, in beta testing since last year, YouTube has morphed Music Key into YouTube Red. It will also be adding a YouTube Music app. If you were part of the beta experiment, you received an email like this one (note: the image is only a portion of the email): 

 

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The $7.99 monthly price tag is something we haven’t seen publicized, so this is a nice incentive to keep Music Key aka YouTube Red. 

Gizmodo reports that there has been some backlash from YouTube fans and content creators, bashing the service.  

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According to Gizmodo, the overwhelming majority of YouTube partners have signed up to be a part of YouTube Red. These partnersincluding a newly signed Disney, represent 99% of all YouTube content. But what about content creators who opted out of the partnership? They’ll still get the same deal they currently have, sharing ad revenue with YouTube.  

In a separate article on The Verge, Popper counters claims made by YouTube creators like Jesse Cox. 

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“Yes, if YouTube Red succeeds, the rich get richer,” said Popper last Friday. “But so do the poor and middle class creators, in equal measure…the idea that ‘no one knows what it means’ for the majority of creators, however, is patently false. YouTube will pay the majority of subscription revenue back to creators, and everyone gets an equal chance to win their piece of the pie.” 

In other news about the announcement, several sites including Slate and the Times of India have said the YouTube Red name sounds like a porn site.  

“Choosing a name for a product is a challenging thing,” a YouTube executive said during a press Q&A. “As we talked to users and fans in our studies, the term ‘red’ is often associated with YouTube. It has a lot of meaning in terms of love and the red carpet.” 

Bottom line: that claim is ridiculous and seems like an attempt to detract from the excitement of what we anticipate will be a successful launch. Sure, some content creators and YouTube fans may not be happy, but it is impossible to please everyone.  

Ultimately, however, YouTube Red has not yet launched, so it is too soon to predict how content creators will fare financially and how many of YouTube’s more than 1 billion users will subscribe. We expect there to be pros and cons to the service. The real proof will be in YouTube’s launch to consumers and its conversion of its 1 billion users.  

Insider Take: 

youtube logoIn its story about the announcement, Business Insider called YouTube Red a “Netflix killer,” but we don’t see it that way at all. In fact, these two products have many differentiating features and little, if any, crossover. Here are some of the unique advantages of YouTube: 

  • Original content from YouTube stars as well as popular videos including TED Talks, concert clips, instructional videos, music and more 

  • Original programming, including movies 

  • An audience of 1 billion users, currently all free users 

  • Access to Google Play Music 

  • Backed by Google 

  • 99.9% of YouTube’s content will remain free, but will be ad-supported (per The Verge) 

  • User hours for YouTube are up 60% over last year, with an average mobile session lasting more than 40 miles 

  • YouTube reaches more 18to34 year olds than any cable network in the U.S. 

  • Two revenue streams: 

  • Advertising model for free users: YouTube gets 45% of ad revenue, content creators get 55%.  

  • Subscription model for subscribers: content creators get paid based on monthly watch time  

In terms of content, we don’t see YouTube and Netflix competing head to head. They may compete for the subscription dollars of cord cutters who are interested in à la carte programming, but that extends across all types of subscriptions and is not exclusive to video. Each streaming video giant has its own audience and its own strengths.  

We think the greater trend is that companies like Google’s YouTube need to diversify income and provide recurring revenue streams through subscriptions, allowing them to continually create new, original content to suit their audience’s needs and tastes. At the same time, subscription companies need to retain what’s working well whether it is an ad-supported or freemium model. 

We’ll keep an eye on YouTube Red and update you as we learn more about it. Stay tuned!