Google owned YouTube, which is the world’s largest online video sharing platform is exploring the possibility of giving viewers the option to move on to an ad-free UI after charging them a subscription fee for the ‘facility’.
This not-very-brilliant idea has been proposed by Susan Wojcicki, a senior Google executive who has been with the advertising wing of the company for many years now. Wojcicki took over YouTube earlier this year and is currently working on improving the profitability of the online video website, which Google bought for $1.65 billion in 2006.
In 2012, YouTube had mentioned of getting 1 billion views a day. Though there have been no official updates after that, the figure is expected to have multiplied many times over, with the smartphones becoming cheaper and ubiquitous and the internet surfing charges dropping substantially all over the world. According to some estimates half of Youtube traffic now comes from mobiles!
Furthermore, even though Google has conventionally refrained from disclosing what percentage of its revenue comes from YouTube, eMarketer, a leading research firm, had estimated YouTube’s gross ad revenue generated during the last year to be $5.6 billion, almost 10% of Google’s total $57.86 revenue for the fiscal year 2013.
“YouTube right now is ad-supported, which is great because it has enabled us to scale to a billion users; but there’s going to be a point where people don’t want to see the ads,” said Wojcicki.
Wojcicki, on her part, is optimistic about a paid, ad-free subscription model of YouTube doing well.
“It’s near term. There are going to be cases where people are going to say, ‘I don’t want to see the ads,” Ms. Wojcicki said. “That’s actually a pretty interesting model because it’s giving users choice,” she said. “We’re thinking about how to give users options.”
There are many apps which charge the users a little extra for providing an ad-free version of the same app. They have to loosen their purse strings to avoid those obnoxious, annoying ads.
Earlier in May 2013, YouTube had allowed content providers to the video site to create their own subscription models, whereby they were allowed to charge a fee from their subscribers for allowing them access to their videos. Individual content creators now charge fees starting from $0.99 per month for viewing their videos. The response to that particular move had been lukewarm, to begin with but it slowly picked up as Google rolled it out to more content partners and countries in October 2013.
Our take
If YouTube was indeed contemplating of charging the users a little extra for providing them an ad-free UI, what kept it away from doing so for this long?
What was it waiting for all this while? Shouldn’t this have happened a long time ago? Wonder why large companies think that jumping into something like this after so many years will be easy?
A large percentage of YouTube viewers flock to the site for watching music videos. With Spotify already offering a streaming music service (in addition to many small time players), how many YouTube lovers will stick on to them is anybody’s guess. Perhaps, Google doesn’t want to learn a lesson from AAPL shutting down Beats streaming within such a short span. Breaking into this category is not easy, and if the search engine giant fails to read the message on the wall, it is likely to be doomed.
On the part of the viewers, the most likely consequence of this ad-free version is that the ad-burden on the free version will further increase. So to say, the video channel might get on to your nerves with so many ads that you are actually forced into opting for the paid, ad-free model.
All the best, Ms. Wojcicki!!
I will pay for an ad free version of YouTube.