YouTube Red – Complement or replacement?

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YouTube recently launched YouTube Red in the U.S, as an alternative to other music streaming services such as Spotify and Deezer. The main difference of course being that YouTube is centred around video content and features not only music videos but also a wide variety of other things such as gaming videos and make up tutorials. Given that, will YouTube Red end up being the streaming service of choice?

To start with, what are the benefits of this service? With YouTube Red you no longer have to put up with any adverts and there’s also the option of background play on mobile devices, meaning you can continue listening to a video even with the screen turned off or while using other apps. Subscribers will also be able to save videos for offline viewing, access exclusive original content by YouTube stars and as a final bonus you get a free Google Play Music subscription.

As for revenue coming back to the creators, with the advert-based version YouTube takes a 45% cut and 55% goes back to the creators. The creators cut from the subscription model will be based on watchtime of their videos each month and they will also be paid a percentage of the total subscription revenue. At this time YouTube will not share what percentage of the subscription revenue they will take themselves however.

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Now with YouTube Red available, what impact will this have on other streaming services? Considering Red is video focused I believe they will be a complement rather than a replacement to music specific streaming services such as Spotify. The may also be targeting a different demographic to some extent, as someone who is mainly interested in video content might not spend money on a music streaming subscription and vice versa.

One perk you do get with the a YouTube Red subscription is of course access to Google Play Music, which one can argue would satisfy any music streaming needs. I do not believe that existing music streaming services will lose customers over this however, as the majority of people tend to like what they are familiar with. Possibly people will find it worth subscribing to two different services, but on the other hand it might not feel necessary to subscribe to YouTube Red as you can usually skip the advertisements after only a few seconds. Many casual YouTube users may not feel the need to pay to be rid of them.

Indeed, monthly subscriptions has been increasing in many different areas, some examples include movie streaming services such as Netflix and HBO, or even mobile phone contracts and leasing cars. So the launch of YouTube Red is an interesting development regardless as the consumption of all music, be it audio or video is steadily moving towards streaming as the medium of choice. Rather than buying CDs, mp3s or watching MTV, monthly subscriptions seem to be the way forward.

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