A few weeks back, Hulu formally announced an ad-free option for subscribers that would allow users to watch the service free of (most) interruptions for an additional fee. Now, not long later, YouTube has unveiled official plans to do the same.

YouTube is going to be going ad-free with a new service dubbed “YouTube Red” that is going to cost users $10/month. Through the service, customers will be able to watch all videos ad-free, in addition to gaining access to exclusive original content from various YouTube creators and major Hollywood studios.

On the surface, the idea of an ad-free YouTube sounds great. No more need to sit through a 15-second pre-roll, or 5-seconds of a 30-second one while waiting for the clickable skip box to appear. However, behind-the-scenes, things are less clear.

At the moment, the way most (if not all) YouTube creators make money is through cash flow produced via the company’s partner program that pays out based on – you guessed it – ad revenue. With this new announcement, what remains conveniently unclear is what will happen to content creators whose revenue streams are based solely on this process? If a user watches a new Freddie Wong video, for example, while using YouTube Red, does RocketJump still get paid? What about the lucky Joe Schmo who hits it big with a funny cat video that goes viral? Will they get paid anything off YouTube Red subscribers skipping ads on said video?

YouTube has been viewed as a creative safe haven not governed by traditional models because it acts much like the wild west of internet videos. As long as you remain within the terms of service guidelines (which are very lax, for the most part), you can really do whatever you want and potentially make money off it. Things like Video Game High School (which paved the way for RocketJump’s forthcoming Hulu series) would not exist without the YouTube partner program that helped build-up the production company up enough to actually produce it. If content creators start taking hits because their videos aren’t technically receiving new ad views under YouTube Red, it could lead to a drastic change in the kind of content produced on YouTube.

To make matters worse, according to TechCrunch, Google told creators that if they didn’t sign on for YouTube Red, their content would be blacklisted and taken out of public view across all tiers. With that, there’s really no other option but to follow along or abandon ship. It still doesn’t clear up the matter of revenue sharing based on views from ad-free audiences, but it does explain why as many creators will be hopping on board as there will be. They had no other choice.

Of course, one of the counters is that YouTube is using the pay service to launch “premium” content with some of its top creators including the likes of PewDiePie, as well as programming from bigger mainstream names including 21st Century Fox, NBC Universal and Time Warner. However, what programming those traditional studios will be provided remains up in the air, for now. What was stated, according to The New York Times, was that the studios would be receiving 55% of “the revenue from the service,” whatever that means.

Another potentially sinister issue is the advent of offline viewing that allows users to download videos to watch free of an internet connection – a feature Amazon similarly rolled out not to long ago for its service. Why is it sinister? Because it could ramp up the issue of illegal sharing even more than it already has. Being able to download YouTube videos has always been a problem, but now it’s being opened up to the masses in a way that can, again, hurt content creators.

When thinking about the new crop of webseries that, in some ways, has been outpacing the quality of some television programming, what happens if one overzealous YouTube Red user opts to download an episode of a new series for offline view, then simply decides to share the file. Of course YouTube may have every intention of throwing some kind of DRM on the videos that make them accessible only in the app to the user themselves, but in the modern age of accessible video, we know anything can be worked around. If creators can’t turn this offline view option off – especially if they are potentially not receiving money for YouTube Red views – it could hurt them in the long run when Red users just start sharing the content via other sources to non-Red customers.

YouTube Red sounds like the ultimate solution for end users tired of ads they find bothersome, but there are holes in what the company announced today that have yet to be addressed. YouTube is an organization that thrives on content created outside the system. That’s what makes it special. If that system is lost, it could potentially shift the way we think about internet video.

Sources: Google, NYT, The Verge and TechCrunch

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