YouTube Red and its Misconceptions

BIG EDIT: This soundcloud goes more in-depth and has some extra info from YouTube, but basically confirms the general ideas presented here, feel free to check it out also.

So YouTube Red was just announced and there’s a lot of things being thrown around in regards to its implementation and the conditions. Obviously I am not an official source, but after reading through several of the interviews and articles, I feel I have gotten a good enough idea about it to answer some of the issues raised.

1) YouTube Creators will need to pay the $10/month subscription fee or have their videos removed.

This is the biggest one I’ve seen kicking around is that YouTube Creators would have to pay for the subscription service. Now from what I can tell, this is arising from some bad wording in some of the articles posted, for example this image here. 

Now, I can see how this can be taken the wrong way, this was a case of bad wording on the articles part. However what it is actually trying to say is that creators need to sign up to ALLOW the service. YouTube is doing this to prevent people from feeling like they are losing value for their money, as there would still be ads on those opting out of the scheme. However, YouTube creators do not need to pay for the service if they do not wish to, this just means that Red users will not see ads on their videos.

2) But if ads aren’t shown, then why not just use Adblock?

There is a fundamental difference between a service like Adblock and the subscription service being proposed here. First I need to explain a little about how Content Creators make their living on YouTube. Excluding networks and taking it down to the basics, YouTubers are paid via ad revenue from their videos. The way this works is on a CPM system, or a Cost Per Mille, which means that the YouTubers get paid that CPM per 1,000 ad views. That’s important, it isn’t video views, but AD views.

Now, exact numbers from content creators cannot be released due to their contracts generally, but CPM’s can vary wildly based on your audience size, potential reach etc, however for this example, lets say that a creator is earning $3 CPM. 45% of this is taken by YouTube straight away, which brings us down to $1.65 CPM. Now, most YouTubers are with a network which would make the CPM’s lower as they take a cut, but lets assume the Creators get the full 55%. We can estimate the value of 1 ad view to be around 0.17c, which as you can imagine is not a lot, however if your videos get large amounts of views it does add up.

Now if 1 person signs up for Red, you lose that 0.17c from the video. But say they watched 50 hours of YouTube that month, and only 5 minutes of that was your content. That Red user would be earning you, after YouTubes 45%, 0.92c. So even with such a miniscule amount, you would earn more from that user than you would them watching an ad.

Of course, this is all speculation, and there are a lot of assumptions, but generally you would be earning much more from Red viewers than ad viewers. HOWEVER, if you use adblock, then that creator is getting paid nothing for your view, and in many cases, ~60% of viewers do adblock content, so you can see how that could become an issue. Some of these people might however, subscribe to Red, and not need to use adblock, and that way you are now earning income from someone you previously earned nothing from.

3) Youtube is supposed to be free, if people start paying then won’t they get a better experience?

In terms of ads, yes, that’s what they are paying for. However, the division of content will be under the creators control, and as such most creators will still offer their regular content, whilst making extra content they wouldn’t have made without Red for behind the paywall. I can understand why people would feel they were “losing out”, but in actuality, that content would never have been created anyway, and as long as the creators do their regular stuff for free still, you won’t notice a difference. If creators start locking their main content behind the paywall, then that’s the creator screwing you over, not YouTube Red.

There’s no denying that YouTube Red has its flaws, its a very similar system to Twitch Turbo, although I think that Red at the moment looks like it’ll reward creators a bit better than Turbo does for streamers. Again this is all based on assumption and speculation, however generally, there is no reason right now to get up in arms about Red. Hopefully more information about cuts and such will be released, and much more clarity and transparency is needed, however the way it is right now, Red lives only to benefit those who wish to buy into it and the creators, and those who don’t subscribe will most likely still get the same old YouTube they are used to.

EDIT: I will keep a look out for more information and update this as necessary, but based on my assumptions and current information we have access to my calculations are correct, feel free to contact me on twitter if you think there are any errors!

If you are unsure, feel free to ask me, and also give these articles a read over, as these are my general sources.

BBC
Variety
The Verge

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