Recently in the U.S. Google unveiled YouTube Red, a paid subscription service for its immensely popular video site. For a monthly $10 fee, users can gain access to an unlimited library of high-quality content – all of it without ads at the beginning of each clip.
A win-win for users and providers, right?
It has already proved a move that has divided opinion across the press, media land, the tech industry, content creators, and the YouTube audience. A few question marks also hang over what this means for YouTube, whether this is likely to be a success and what it spells for the future of the platform.
To tackle what this means for YouTube is that it is actively pursuing the premium content space. Subscription models within the entertainment industry have gained traction over the past few years, starting successfully with Spotify and Netflix, we've now seen Amazon Prime making gains, as well as Apple Music entering the fray.
It's clear that the modern consumer is willing to pay to have access to premium content they can't get anywhere else so it's understandable for a video platform like YouTube to make a similar move -- especially when it wants to take on the likes of Apple.
So will this be successful? In reality, the public has grown used to accessing YouTube for free, so it won't be enough that the content is simply ad-free. At any rate, there is a subculture within the advertising industry that focuses on how to advertise on YouTube, so it's hard to imagine this evaporating entirely.
Added to this, there is a lot of low-quality content on the platform – but this is not where Red will be making its money. Instead, its extensive roster of high-profile vlogging talent, such as RayWilliam Johnson and Smosh, will make up the draw for paying customers. These vloggers have used YouTube to become famous and will likely think Red can help them achieve more of this fame.
Tellingly, YouTube heavyweight PewDiePie – AKA Felix Arvid Ulf Kjelberg -- has recently blogged on Tumblr urging users to sign-up to the new paid model. He specifically calls out the impact that ad-blocking has on YouTubers, with Red offering an alternative. Citing the fact that 40 percent of YouTube's audience uses ad-blockers, he comments: "Ads are annoying, I get it, and I'm not here to complain about that. But for smaller channels, this number can be devastating."
This takes me back to what it will mean for YouTube, with my hunch being that Red will attract a specific type of content creator. One of the big areas for expansion is within what I like to think of as the "middle", so indie film producers and up-and-coming vloggers that create high-quality content, but are struggling to put their heads above the parapet and make money in a sea of competition.
The second source of content will be from the top. There has previously been a certain friction between YouTube and larger production studios. Vloggers have started to eat into the daily viewing time of young people: A GlobalWebIndex study from Q1 of this year reveals that half of all 16-24 year-olds and 25-34 year-old have watched a vlog in the past month, 93 percent of them having done so on YouTube. On the other hand, YouTube has had to battle against the vast audiences of more traditional channels when it comes to attracting that all important ad spend.
The success of Red will rely on the bridging of this gap, because it will need that high-quality content to attract paid users, and if Red goes well it could be a new source of revenue for those producing premium content. YouTube will be waiting to see if these producers come to them and, if they don't, I anticipate that we'll see the platform making the first move instead.
After all, this premium, editorialised, high production-value content will be what sets Red apart from the regular ad-supported model. If Red is a success, I see Google furthering this position and turning itself into a content producer in its own right, just as we've seen with Netflix and Amazon.
Niel Bornman is Global Chief Product Officer at iProspect, the world's largest digital performance agency . You can follow @iprospect on Twitter.