Alphabet Inc’s (Google’s parent company) YouTube will start selling ad free subscription service dubbed as ‘YouTube Red’ from Wednesday next week for $9.99 a month to US subscribers. The ‘YouTube Red’ will allow subscribers to watch almost everything without annoying ads, to download almost any video for viewing offline later.
To make the deal sweeter, ‘YouTube Red’ will start adding exclusive shows and movies from top creators like PewDiePie, Lilly Singh and The Fine Brothers from early next year. ‘YouTube Red’ will also feature Google Play streaming music for music lovers.
The new subscription service also comes with ‘background play’ feature, which allows the video content to keep playing even while you access other apps. The new subscription based model aims to counter competitors like Netflix and to turn YouTube into a profitable business. Just serving ads in and around video content doesn’t always cover the cost of serving billions of videos each day.
Content creators may be supplying free content but in the end YouTube has to part way with 55% of the revenue, so YouTube Red seems to be a win-win situation both for company and video publishers. However, there are some reports that YouTube is forcing content creators to sign a new revenue sharing deal post launch of ‘YouTube Red’.
A recent estimate by UBS industry analyst showed that YouTube can generate as much as $950 million even if 5% of US users subscribe to ‘YouTube Red’.
Matthew Glotzbach, the company’s vice president of product management, said, “By no means would we expect to jump to tens or hundreds of millions of paying users overnight,” but there should be “strong demand” from the start.
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YouTube has managed to create many millionaires who used their cameras to film witty and interesting videos in their bedroom, kitchen or gardens. It will be interesting to see how the new revenue model pans out for ever expanding generation of YouTube stars. Will you subscribe to new ‘YouTube Red’ or stick with good old YouTube free videos? Please comment with your opinion.