Depending on which site you read, YouTube’s decision to offer a paid, ad-free service is either the beginning of the end of YouTube, an insult to the intelligence of YouTube viewers or an example of YouTube playing catch-up with more consumer-savvy entertainment services.
YouTube Red—not to be confused with RedTube, a free porn site—removes ads and allows you to save videos offline if you agree to pay $9.99 a month. YouTube creators were given a choice of either acquiescing to the terms of YouTube Red or having their videos marked private.
There is nothing unusual about YouTube Red’s business model, and there is a good chance that it will be popular with at least some of the billion people who watch YouTube videos each month. Netflix, Pandora, and Spotify have already demonstrated that people will pay to make ads go away.
But the new terms of payment proposed by YouTube took many of the site’s independent creators by surprise. Creators are used to receiving a portion of sales of the ads shown on their channel. Some assumed that they would be compensated per viewer under YouTube Red. Instead, they learned they will be paid according to the percent of total minutes that YouTube viewers spend on their channels. “So whatever the ratio of your minutes watched is versus the total minutes watched in the pool, multiplied by the total revenue would be your payout,” explained John Bain, who posts commentary about games on YouTube user the handle “TotalBiscuit.”
“What’s the difference between that and the other payout method?” Bain continued. “Well, it’s worse for smaller channels, simple as that.”
It’s also means broadcasters who get a lot of viewers who stick around for only a minute or two may not do as well as they did under the ad-supported model. In fact, they might do worse overall.
Daniel Hardcastle, known as NerdCubed, a comic and gamer with more than 2.3 million YouTube subscribers, worried that YouTube Red would lead to lower advertising rates. “Advertisers want people with money,” he said in a tweet. “The people with money can now remove adverts leaving people ad peeps don’t want.”
The plight of the independent creator met with only limited sympathy from colleagues in the mainstream media.
Ben Popper, a writer for the Verge, described the new system as “wonderfully democratic.”
Richard Lawson, of Vanity Fair, used the news as an excuse to launch a diatribe against the quality of YouTube videos. “What I’m worried about is that we’ve arrived at a point where YouTube (and The Verge) thinks we should be paying for YouTube videos. YouTube videos! Has YouTube seen YouTube videos? YouTube videos are, by and large, hot stinky garbage.”
There was a time when Google would have argued that ads wouldn’t be so bothersome if they were relevant. But Google’s utopian vision of perfectly matching people with products and services has yet to come to pass. In that sense, YouTube Red represents a capitulation by the Internet giant. Even Google has been unable to design an algorithm that delivers ads that YouTube viewers want to watch.
“For years, YouTube’s fans have been telling us they want more—more choice when watching their favorite content, more ways to support their favorite creators and, above all, the option to watch their favorite videos uninterrupted,” Matt Leske, YouTube’s senior product manager, wrote on YouTube’s blog.
YouTube Red will deliver uninterrupted viewing, but it might do so at price of interrupting payment to some video creators.