YouTube Red: YouTube’s new site-wide subscription service

YouTube Red

After months of testing under the name YouTube Music Key, the wide-scale rollout of YouTube’s subscription service has finally come, ­now dubbed YouTube Red.

The subscription option comes with all of the same features as Music Key, but available to videos of all types, not just music. Subscribers will be able to enjoy an ad-free experience across all of YouTube’s platforms including YouTube Gaming, YouTube Kids, and YouTube Music. On mobile, users will be able to download videos for offline play, and continue the playback experience in the background (think music videos, lyric videos, podcasts). A subscription to YouTube Red will also include access to Google Play Music, which allows for streaming of their vast commercial library, with content very similar to that of Spotify and iTunes.

Creators should, in theory, see a bump in revenue as some of their viewers jump on YouTube Red. Similar to our previous thoughts, here’s how revenue sharing will work:

A user subscribes to YouTube Red for $9.99 a month.

Right off the bat, YouTube takes their split, leaving $5.50 on the table for partners to earn in alternative revenue for the month.

Let’s say that the viewer is a huge fan of your channel. During the course of one month, the viewer watches 200 total videos (about 7 videos a day) of equal length*. 50 of those videos came from your channel.

That calculates out to 25% of the subscriber’s time spent watching your channel.

You would receive 25% of $5.50, or about $1.38.

Comparing this to traditional advertising revenue, that’s 50 views for a total of $1.38 – an effective CPM of $27.60 from this particular YouTube Red subscriber. Revenue sharing among the creators is calculated based on watch time – this model assumes that all views are of equal length, but creators with longer content could conceivably earn more than those with shorter length content.

In addition to a feature-rich viewing experience, YouTube Red will come with access to a whole new round of exclusive subscriber-only, YouTube-funded original content starting next year. Creators taking part in this new premium content initiative include PewDiePie, Joey Graceffa, CollegeHumor, and Toby Turner. The SVOD model isn’t new to YouTube – channels have long been able to create their own private subscription offerings for as little as $1 a month – but this new bundled package provides much greater incentive for a fan to buy in.

YouTube Red will be available in the United States starting on October 28 for $9.99 a month covering Android, desktop, and mobile web, but will reportedly cost $12.99 to include iOS usage.

It’s not immediately clear when YouTube Red will be available in other countries, however all creators worldwide will be able to earn revenue from YouTube Red subscribers.

What are your thoughts? Leave a comment or shoot us a tweet to chime in on the conversation!

Updated 10/22/15: More information on rollout and geographical availability.