Google Inc. is rolling out an ad-free subscription service, YouTube Red, along with a host of original programming to lure paying subscribers to its massive YouTube platform.
YouTube Red will cost $9.99 a month for Android users when it launches in the U.S. next week after years of development. It will be available when subscribers sign on a variety of devices and apps, including a new YouTube Music app that is set to launch later this year. The YouTube Kids app doesn’t allow users to sign in, so it won’t immediately support the ad-free service.
YouTube Red will expand to other major markets next year. For users of iPhones and other Apple Inc. devices, the service will cost $12.99 a month. The subscription price for Apple users is more expensive because Apple charges app makers a 30% fee on in-app purchases such as subscriptions, a Google spokeswoman said.
For Google, the service opens up a new revenue stream while appeasing content partners such as record companies, who are counting on subscription streaming revenue to stay afloat, as CD and download sales decline.
Record company executives have frequently complained that free, ad-supported music services such as YouTube don’t generate enough revenue to sustain the music industry in the long term, and some are frustrated that Google has taken so long to offer the paid YouTube service. Google will soon have to make fresh licensing deals with record labels to use their music on the new service, as at least some of its rights expire early next year.
Google has for several years offered a separate $10-a-month music-subscription service,Google Play Music. But its subscriber base is much smaller than the 20 million subscribers paying for Spotify AB and the 6.5 million subscribers paying for Apple’s three-month-old Apple Music, according to people familiar with the matter. Google didn’t respond to requests for comment on subscriber numbers.
Google launched a beta version of its music-and-video subscription service, dubbed YouTube Music Key, a year ago. It hasn’t disclosed subscriber numbers.
The new service also represents an effort to retain popular YouTube creators, as rival online video services try to woo them with more lucrative revenue-sharing deals and offers to make original movies and TV shows. Among the exclusive content offerings YouTube announced Wednesday are a feature-length film about a singer on tour called “A Trip to Unicorn Island,” a romantic drama series called “Single by 30” and an untitled series that “will take a dark and comedic look at the absurdity of Internet culture,” according to Google press materials.
“We’re realizing paid membership is a really hard business to be in,” said YouTube Chief Business Officer Robert Kyncl at a press event Wednesday at YouTube’s campus near the Los Angeles International Airport, a sprawling space where YouTube stars and mainstream artists frequently perform and make videos. To compete, Mr. Kyncl said the company focused on its exclusive content and the “most desired” features on subscription services, such as offline capabilities.
YouTube’s new music app will also seek to differentiate itself from competitors. For instance, subscribers will have access not just to the same 30 million-song library that they do on Spotify and Apple Music, but also to an easily searchable database of each artist’s music videos, live performance videos, covers, remixes and other unofficial versions of their songs.
The music app will be free to download and use, but subscribing will remove ads and unlock additional background and offline features. App users get a 14-day free YouTube Red membership without entering a credit card number, and can extend their trial for an additional 30 days after entering credit card information.
The new music app will operate separately from Google Play, but YouTube Red members will get subscription access to Google Play Music, and vice versa.
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