YouTube’s New Subscription Service Bets Big on Its Stars
YouTube has come a long way from its humble beginnings as a small Internet destination where users swapped silly homemade videos for fun. As expected, the company just launched a slate of original programs—along with a sneaky-smart music streaming plan—accessible only to users who pay a monthly subscription.
At a press event this morning in San Francisco, livestreamed in from the YouTube Space in Los Angeles, the video-sharing company announced YouTube Red, a subscription service for the site’s most dedicated viewers. For $9.99 a month (or $12.99 if you order through iTunes; iOS users can pay the normal price if they sign up through the web), the YouTube Red membership gives users access to ad-free videos, original shows and movies from YouTube creators (including PewDiePie, Joey Graceffa, Fine Brothers Entertainment, and more), the recently launched Gaming app, and YouTube Music, a new app that will be available soon. Crucially, a YouTube Red subscription will be interchangeable with a Google Play Music subscription, making this as much a streaming music investment as anything.
To be clear, most YouTube videos will still be available to all users. But creators will now have a new option to put some of their content behind a paywall, and YouTube Red subscribers will see them ad-free either way.
“Today marks a new chapter in us giving fans the choices they want in watching YouTube,” Robert Kyncl, YouTube’s chief business officer, said during the event. “A paid membership is the ultimate YouTube experience.”
YouTube Red will be available for a free one-month trial on October 28, and YouTube Music will go live soon after. In fact, it’s the music part that might be the most enticing of all.
Online Video Has Grown Up
Over the past ten years of its life, YouTube has grown up—and online video has matured right along with it. What used to be a grassroots space, where people threw up monologues about elephant trunks or shared a snowboard wipeout with friends, quickly became commercialized. Today, ads aren’t just thrown against amateur, user-generated content. There are entire ecosystems behind the creation of Internet videos, from viral video businesses to social media talent agencies. And online video stars have a bevy of options to broadcast themselves on, including Facebook, Vine, Vessel, Vimeo, and so many others.
Where YouTube still trumps all of those, at least for now, in scale. It’s still by far the world’s leading hub for Internet video, generating billions of views a day—a very attractive number to creators. But Facebook, which recently surpassed four billion views a day, is rapidly encroaching on YouTube’s turf.
“This is a serious threat to YouTube and its product,” says Jan Rezab, founder and chairman of social analytics site Socialbakers. “YouTube’s launch of a premium service competes with video platforms and streaming services other than Facebook, but YouTube should really focus on fixing discovery and adding social connections.”
But with today’s announcement, YouTube seems to be saying that social distribution still isn’t enough—or at least, isn’t their current focus. Instead, YouTube looks to be leveraging what it considers its best weapon: its native stars, who, it’s worth saying, have enormous social followings themselves.
“Investing in content production to secure exclusivity and curate certain audiences is the next battle these platforms will need to face if they want to differentiate,” Samantha Merlivat, an analyst with industry research firm Forrester, tells WIRED. “Otherwise they risk of losing their status as a ‘destination’—a place consumers actively visit to watch content, instead of letting the content come to them, via social, for instance.”
Content Is Hard
But creating content is hard, as the recent shuttering of Snapchat’s original content business, Snap Channel, shows us. The social network launched Snap Channel to much fanfare back in January, and then, even before the end of the year, permanently shut down the video hub and laid off or reassigned its content development team.
Not that you can blame Snapchat for trying. It had seemed like a good bet back then, with Reddit and Vimeo getting original video content into their offerings, and social networks like Facebook and Twitter launching native video platforms to make viewing content seamless in their streams (and to attract more users and advertisers). Smaller companies had also started to catch on, from Vine (six-second videos) to Vessel and Victorious (exclusive Internet celebrity content).
None of these players, however, has emerged as a clear winner in original video, except Netflix, which has continued its push into original programming to encroach on players like HBO, which has always enjoyed Hollywood-level production and resources (read: fully equipped studios). But Netflix, unlike more idiosyncratic video startups, has the advantage of being able to do video in the traditional longform format.
YouTube’s Feeling of Intimacy
OK, so what does YouTube have going for it? Well, it may be the only video company thus far whose unique format—which is still decidedly different from traditional video as we’ve always known it, on film screens and on our televisions—has seen this kind of massive success. A Variety survey recently found that among US teens, YouTube stars are even more influential than Hollywood celebrities like Taylor Swift and Johnny Depp. That’s YouTube’s edge.
Of course, the question remains whether YouTube’s core audience, teens—not exactly a credit card-wielding demographic—will be willing to pay the fee for YouTube’s membership service. When viewed strictly for its video chops, YouTube Red has a tough case to make next to comparably priced Netflix and Hulu.
But Jeetendr Sehdev, celebrity brand strategist and professor of marketing at the Annenberg School of Communication, says it would be unwise to underestimate the feeling of intimacy YouTube has fostered with its audience. “You see from the standpoint of audiences that fans are so much more loyal and bonded to YouTube,” says Sehdev. “Even with a paid subscription, that intimacy and authenticity—the foundations of the platform’s appeal—isn’t compromised.”
Even beyond its video stars, the real value YouTube Red may be its music offering. It includes Google Music, a $10 per month subscription in its own right, meaning you get access to a Spotify-like streaming service for the same amount as Spotify, with ad-free YouTube videos and the occasional paywalled YouTube star thrown in for good measure. That may be the best bargain in streaming.
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