As more consumers tire of footing the bill for advertisers content producers are being forced to look into other revenue generation models. Yesterday Google joined the legion of content producers experimenting with directly charging for content by announcing a YouTube subscription service:
At a press event this morning in San Francisco, livestreamed in from the YouTube Space in Los Angeles, the video-sharing company announced YouTube Red, a subscription service for the site’s most dedicated viewers. For $9.99 a month (or $12.99 if you order through iTunes; iOS users can pay the normal price if they sign up through the web), the YouTube Red membership gives users ad-free videos, and original shows and movies from YouTube creators (including PewDiePie, Joey Graceffa, Fine Brothers Entertainment, and more). It also opens up access to the recently launched Gaming app, and YouTube Music, a new app that will be available soon. Crucially, a YouTube Red subscription will be interchangeable with a Google Play Music subscription, making this as much a streaming music investment as anything.
I think this is a sensible approach. Google will still maintain the ad supported service but is now adding a subscription service that removes ads and gives subscribers access to premium content. Sweetening the deal is the fact that a YouTube Red subscription also gains you access to Google Play Music, so subscribers are really getting some Nextflix and some Spotify for the price of one of those services individually.
In addition to premium content subscribers to YouTube Red will enjoy a more secure experience since ad networks are a common vector for malware, better battery life since ads consume a notable amount of power, and lower bandwidth bills since ads eat up a lot of bandwidth. For heavy YouTube users $9.99 per year might prove to be a savings compared to the cost of buying additional data for ad usages.
Although most media outlets are focusing on Google offering premium content for subscribers the big news, in my opinion, is the fact Google is offering a subscription service at all. For the longest time Google was the name in Internet advertising. In fact it still is. But even it’s seeing the writing on the wall. Through the pervasive use of ad blockers consumers are signaling the market that they’re no longer satisfied with being the product. Unlike many businesses, which stick their head in the sand when their business model starts dying, Google is at least experimenting with alternative revenue sources. I hope it proves successful because I want to see the advertising model die in a fire.