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.
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.
Current subscribers to the Google Play Music service, which also costs $10 (roughly Rs. 650) a month, will also get access to Red.
"It's
a major, major evolution of our platform," YouTube's chief business
officer, Robert Kyncl, told journalists at an event at its studio space
in Los Angeles.
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. It comes as streaming
services like Hulu, Pandora, Spotify and TuneIn offer ad-free as a paid
option.
The plan, which launches October 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. The new YouTube Music app will allow
you to toggle music videos to play audio only.
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. The apps, including the existing YouTube app, are free to
download.
The service will cost $13 (roughly Rs. 845) a month if purchased through
Apple's iTunes - but only because Apple takes a 30 percent cut,
executives said. If purchased through the Google Play Store or on the
Web, the subscription will still work on apps running on Apple's iOS or
Safari browser.
The original videos will range in length from a
few minutes to feature-length movies and come from established YouTube
stars such as the Fine Brothers, who are creating a scripted 10-episode
series about a singing competition show called "Sing It." Another new
show stars video game-playing star Felix Kjellberg in a reality series
co-created by the makers of "The Walking Dead" called "Scare PewDiePie."
Performer
and comedian Lilly Singh said that while YouTube helped pay for the
creation of a documentary of her world tour called "A Trip to Unicorn
Island," the new service won't drastically change how she serves her
fans.
"Is YouTube Red going to be the extreme make of my financial
career? No," she said. "But that's not why I'm doing it. I'm doing it
to give my viewers choice."
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. Some
original content will also be made available to non-subscribers later
with ads.
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. He said YouTube's advertising
revenues will not be hurt, given that the number of users switching to
the new service won't likely make a dent in YouTube's billion-plus
users.
"It wouldn't really impact the amount of eyeballs we're providing through our platform," he said.
One
challenge is getting people to pay for a service they long associated
with being free, said RBC Capital Markets analyst Mark Mahaney in a
research note Wednesday.
The move comes amid a boom in consumer appetite for ad-free experiences.
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.
And yet content providers are finding a way to make money from eliminating ads, too.
Internet
radio giant Pandora Media Inc. made $54.6 million (roughly Rs. 355 crores) on subscription and
other revenue in the quarter through June, mainly from its $5-a-month
ad-free plan, Pandora One. Its subscription revenue is growing faster
than ad revenue itself.
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 (roughly Rs. 520) a month in August that throws ad-free
music together with audio books and sports play-by-play coverage.
Red
could help boost the ranks of Google Play Music subscribers, which
stood at around 815,000 in the U.S. at the end of last December,
according to royalty tracking firm Audiam.
That's far short of
leader Spotify with 20 million paying subscribers globally. Apple Inc.
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.
YouTube is part of Google, a division of the newly created holding company Alphabet Inc.
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