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Pay for Ad-Free YouTube

Starting today, YouTube is launching YouTube Red where you pay $9.99 per month for removing ads and a subscription to YouTube Music. The money made directly from viewers instead of marketing will go to help support the creators. This change greatly effects  companies relying on those 5 to 30 second ads before the video is played and they may need to find new ways to create advertisements. Depending on how fast YouTube Red catches on, the values for posting advertisements on YouTube may alter as well. Companies may not be willing to bid the same price for certain slots knowing that less viewers on YouTube will be exposed. This would decrease the revenue YouTube gains from external ads, but the subscription costs for YouTube Red ideally should equal or exceed the lost in demand from advertisers.

In turn, the time saved from not having ads will increase the number of views. The higher number of views will also increase YouTube’s revenue and the creator’s revenue since they are paid per click/view. Currently the number of views on Facebook is higher because of the no ad viewing. Now that YouTube creators can make more money from viewers with YouTube Red, this can link back to the importance of weak ties. YouTubers with a strong and dedicated fan base can purchase YouTube Red to support the posted content and the creator will have a higher benefit.

The incentive with the linked subscription to Google’s Play Music will also have effects on the music listening and purchasing trends. Recently consumers have been less likely to pay for songs and would rather listen to music or watch music videos free of charge on streaming apps such as Spotify and Pandora. The shift in ways music and entertainment is received can potentially cause a “following the crowd” movement towards outlets with reduced advertisement standards.

http://www.reelseo.com/youtube-red/

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