Friday, October 23, 2015

Google to Offer New "YouTube Red" Subscription-Based System

Where YouTube once made all of its income through advertisement sales, the Google-owned company is planning to make a big change. Starting next week, YouTube will be providing an option for viewers to pay $9.99 per month to be a part of a service called YouTube Red. As described by Saba Hamedy and Paresh Dave, in their L.A. Times article, this service will not only remove advertisements from most videos, thereby enhancing the viewer's enjoyment, but will also provide the ability to download content and stream music from Google Play.

YouTube, which first opened in 2005, grew in popularity very quickly and as purchased by Google a year later. Since then, while videos on YouTube get millions of views per month, Google has found that the well-known site is not quite the money-maker it might have been expected to be. Analysts believe that this is because YouTube is free, in general. Artists, musicians, instructors, and entertainers can upload videos for free, and people around the world can watch, like, and comment those videos for free. Only videos with advertisements provide any sort of income to YouTube and the maker of the video.

Now, with YouTube Red, Google's parent company, Alphabet Inc., expects to make far more money from the site without increasing advertisements or drastically changing its currently free setup. Analysts YouTube Red has great potential to become hugely profitable, but only if YouTube finds a way to overcome competition by Facebook, Vimeo, and Snapchat, among several other competitors.

Furthermore, will it really be worth it to viewers? Is the removal of ads, even on top of the addition of all kinds of new content by such YouTubers as The Fine Bros, Lilly Singh, and Pewdiepie, really worth the $10 per month that it will cost. YouTube tends to be targeted more toward teenagers and younger Millennials, so that would also mean that subscription to YouTube Red would probably fall under the jurisdiction of viewers' parents, who may not be willing to spend money on that which used to be free.

Much of the new content will be produced by well-known YouTube stars, who, unlike so-called "traditional actors," tend to come up with the content in their own videos. Many such stars started out with comedy or singing shows, filmed in their bedroom, and since have accrued hundreds of thousands of subscribers. It is these individuals that YouTube Red is going to use to try to pique the interest of potential viewers.

Market research company EMarketer believes that the growth of YouTube's ad revenue will slow over the coming years, which would make now the perfect time for the company to move away from advertisements and toward other forms of income. Many wonder, however, how this new system will affect the YouTube stars, some of whom are making a comfortable living off of payments from advertising sponsors. Will they be willing to give up that security to be a part of this new project? Hamedy and Dave seem to conclude that with YouTube Red, the stars will have more opportunities to create newer and better content that previously would have been cost prohibitive. YouTube executives believe that the stars will see the project's potential and will happily sign on to be a part of this new system.

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