YouTube is launching a subscription plan in the U.S. called Red that combines ad-free videos, new original series and movies from top YouTubers like PewDiePie, and on-demand unlimited streaming music for $10 a month.
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 $10-a-month Google Play Music service will also get access to Red.
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.
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The plan, which launches Oct. 28, includes exclusive access to new videos launching next year, as well as the YouTube Music Key service — to be called YouTube Music going forward — for music videos.
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. A subscription will eliminate ads from all YouTube services across devices and platforms except for the YouTube Kids app, which is operated separately.
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, but consumer appetite for ad-free experiences is booming.
Why Its Hot:
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 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 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.
As a consumer, I am already paying $10/month for my music. Google isn’t trying to only compete against music services (Spotify/Apple Music/etc.) or video services (Hulu/Netflix/etc.) anymore, it’s trying to win users by giving them both for that base price.