YouTube launches paid ad-free service

YouTube launches paid ad-free serviceYouTube is betting that fans of its top stars will pay the same price as a Spotify or Apple Music subscription for the Google-owned site’s long expected paid service that includes video, music and gaming.

The $9.99 a month offering from the world’s biggest video site, called YouTube Red, will allow customers to access YouTube videos, the company’s gaming app and a new music app without commercials. It also includes exclusive series and movies from YouTube stars such as Joey Graceffa, PewDiePie and Lily Singh. The service launches in the US next week.

The new subscription absorbs YouTube Music Key, the paid music service launched in beta last year that was also priced at $9.99 a month. The Google Play Music streaming service will remain separate, but subscribers to YouTube Red and Google Play Music get access to both offerings.

“For the price of a music streaming service or entertainment service alone, we’re giving you access to ad-free video, music and gaming,” said Robert Kyncl, YouTube’s chief business officer.

The Google-owned site will pay out a portion of subscription revenues to content owners, with individual creators’ shares varying based on how much time people spend watching their videos. YouTube has built a big advertising-supported business on the back of its huge audience — it says more than a billion people watch hundreds of millions of hours of video every day — and shares 55 per cent of ad revenues with creators.

Content owners who do not want to put their programmes behind a paywall will no longer be able to post their videos publicly on YouTube’s US site. Executives said they have reached agreements with 99 per cent of creators, including big media companies that use YouTube as a promotional tool for their television shows and movies.

The company’s move to add a premium tier comes as subscription internet video services are gaining in popularity, fuelled by the success of a new wave of offerings from media companies including Walt Disney, Time Warner’s HBO service and CBS.

“Companies both old and new are moving online at an incredible pace,” Mr Kyncl said. “What’s also happening is that consumers are embracing paid subscriptions for ad-free content at an incredible pace.”

US adults still spend more than four hours a day watching traditional broadcast and cable television, according to researcher eMarketer, compared with just over an hour watching video content on desktop and mobile devices. But time spent with online video is expected to grow while TV watching has been on the decline.

Giving its roster of homegrown video stars a cut of subscription revenue will help YouTube fend off challengers such as Vessel, which has been targeting YouTube talent with its own subscription service for short-form video, and Facebook, which has been stepping up competition and now boasts 4bn daily video views.

This month, the world’s largest social network began testing a dedicated video section in its app to encourage people to watch more.

Source: Financial Times
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