YouTube preps paid, ad-free subscription service

DetailsMichelle Clancy | 10 April 2015

YouTube is plotting an "ads-free version of YouTube for a monthly fee".

In a letter to video creators shared by Bloomberg, it said that "by creating a new paid offering, we'll generate a new source of revenue that will supplement your fast growing advertising service".

The move is not unexpected given the launch of Vessel. Headed by former Hulu CEO Jason Kilar, Vessel has set sail with a mission to re-write the current online video business model. The company believes that the existing paid and online advertising offerings make it extremely challenging, if not impossible, for most independent creators and content owners to realise their creative and professional ambitions.

Accordingly, Vessel will offer access to short-form videos for $2.99 per month, and it plans to offer a significant chunk of that to its content creators. This, the company believes, is sustainable with the addition of a limited amount of advertising.

Alex Pitti, equity analyst with Instavest, said that this would put pressure on YouTube to deliver more value (cash) to its content providers.

"YouTube's free model certainly needs to be amended [and] may need to be changed toward paying content creators more than they are getting now if Vessel puts pressure on YouTube," Pitti noted. "The creation of Vessel isn't all bad news for YouTube, because it will be a test run to see the pricing power Internet video has."

For YouTube's part, "While we can't comment on on-going discussions, giving fans more choice to enjoy the content they love and creators more opportunity to earn revenue are always amongst our top priorities," it said in a statement to media.