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In The Age Of HBO Now, YouTube Wants You To Pay Up

As competition from Netflix and HBO heats up, YouTube is tinkering with its revenue model.

In The Age Of HBO Now, YouTube Wants You To Pay Up
[Photo: Flickr user Thomas van de Weerd]

Would you pay for YouTube? It might sound unthinkable, but in an era when Netflix originals are winning Emmys and HBO feels confident enough in its streaming model to unbundle itself from cable, it’s not far off. In fact, the growing competition for your eyeballs may leave YouTube with little choice.

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Google is reportedly planning to offer a paid subscription version of YouTube sometime this year, according to Bloomberg Business. The as-yet-unknown monthly fee would let subscribers watch YouTube videos without having to endure pre-rolls and other forms of advertising.

Tinkering with this model gives YouTube the ability to experiment with a new revenue stream without disrupting the tried-and-true ad-supported experience YouTube viewers have known for the last decade.

The news apparently leaked from an email sent by Google to some of its video creators. As Bloomberg Business explains:

Revenue from the new feature, which will put Google into more direct competition with streaming services such as Netflix Inc. and Hulu LLC, will be shared with video creators, Google told them in an e-mail that was obtained by Bloomberg. The service may debut by the end of the year, said a person with knowledge of the matter, who asked not to be identified because the plans aren’t public. “By creating a new paid offering, we’ll generate a new source of revenue that will supplement your fast growing advertising service,” the letter said.

It’s not the first time YouTube has toyed with the all-you-can-stream subscription model. Last year, the video giant unveiled YouTube Music Key, a music subscription service to go up against Spotify, Rdio, and which unofficially complements Google Play Music All Access, the company’s other paid music product.

This new model is a bit different from what YouTube is doing on the music front. From the looks of it, Google isn’t planning to wall off any of YouTube’s massive repository of videos behind a pay gate, but rather offer the subscription option in lieu of advertising–not unlike what Spotify does with music.

Another rumored perk of the upcoming subscription tier is the ability to watch videos offline, which is another feature borrowed from the streaming music world–and one that Netflix doesn’t have.

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The news comes at a time when competition the streaming video subscription space could hardly be heating up more rapidly. Just as Netflix is hitting its stride with a slew of highly successful original series (a strategy that competitors like Hulu and Amazon Prime are eagerly trying to emulate), HBO is finally making its wildly popular TV shows and movies available in the form of an on-demand video streaming subscription service that doesn’t require a cable subscription. First announced at Apple’s “Spring Forward” watch announcement event a month ago, HBO Now launched on Apple TV and in the iOS App Store earlier this week–just in time for the upcoming Game of Thrones season premiere.

HBO’s shift in strategy positions it squarely against Netflix. The success of both companies puts some serious heat on YouTube as viewers spend more and more time bingeing on shows like House of Cards and rewatching The Wire.

It’s not as though YouTube didn’t see these threats coming. The company has been ramping up its own original content for a few years and has reportedly been working hard internally to make YouTube itself more of a go-to destination for engaged video-watching, instead of relying on views from the countless video embeds scattered across the web.

Having already invested millions in original content, there’s only so much YouTube can do to reel in more viewers and keep their attention. Improving the user experience is one of those things. Still, tweaking its interface and tinkering with its video recommendation engine can only go so far. By offering the option to kill the often pesky ads that run before and after videos, YouTube could wrangle people’s fractured attention spans even more effectively.

That is, assuming people are willing to pay.

[via Bloomberg Business]

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About the author

John Paul Titlow is a writer at Fast Company focused on music and technology, among other things. Find me here: Twitter: @johnpaul Instagram: @feralcatcolonist

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