5 Reasons You'll Pay YouTube $9.99 a Month
Alphabet's (GOOG, GOOGL) video-sharing site will charge $9.99 a month for YouTube Red. Most clip-culture disciples will continue to consume the site in its original free incarnation, but there are some pretty good reasons to pay up if you have the means and spend a lot of time on YouTube's site or app.
1. We Are Now Used to Paying for Ad-Free Digital Content
Rolling out YouTube Red at the same $9.99 monthly price point as Netflix (NFLX) may seem risky, but Hulu just introduced a new pricing tier that at $11.99 a month will strip ad blocks from its streams. YouTube is pricing its product competitively, and it's happening at a time when folks are growing more receptive to paying up for streaming media.
Netflix expects to top 74 million subscribers worldwide by the end of the year. Spotify has more than 20 million premium users for its streaming music platform. The numbers are there.
2. YouTube Content Is Different
Netflix has led the push by premium video services to add original content. Netflix and Amazon.com (AMZN) have won Emmy awards for their proprietary shows. This has raised the bar in terms of differentiation. If folks are expected to subscribe to more than one streaming service, each one has to have stuff that you can't find anywhere else. Well, differentiation is what YouTube is all about.
Anyone can upload content to YouTube, something that naturally doesn't apply to Netflix, Amazon or Hulu. Is a lot of it junk? Sure. However, the site's good about bubbling up compelling content to the top. At the end of the day, YouTube has more original content than any other platform -- and it isn't even close.
3. Your Time Matters
It's probably not a surprise that Netflix has become so popular because it offers ad-free content. Cable and satellite television providers that charge substantially more than Netflix even slap commercials on their on-demand content. You don't want that. You deserve better than that if you're willing to pay up to go through more content.
If you think TV commercials are bad, just spend a day on YouTube. Many of the shorter clips have ads, and while the ads are often skippable, it can be a hassle to actively select to end some commercials prematurely. The time you save is probably worth more than $9.99 a month, and it will make the overall experience even better.
4. Content Creators Will Make the Most of the New Revenue Stream
There are more than a billion active users on YouTube, and many of them -- like me and possibly even you -- upload original clips to the site. It pays to be a content creator. My Moonpies channel has let me pocket thousands of dollars over the years. I have more than 15,000 subscribers and am closing in on 4.6 million views, but that still makes me a small fry on the site. There's a growing number of magnetic personalities generating six figures a year through the site's ad-sharing platform.
YouTube Red will give them a new way to cash in. It remains to be seen if it will generate more or less revenue than having ads display on those premium accounts, but diversification is usually a good thing.
5. There Are Perks for Going Premium
YouTube Red isn't just about the ad-free experience and encouraging creators to upload more content to cash in on the new monetization platform. Folks paying $9.99 a month for the new offering will be able to access Google Play Music for streaming tunes. They also have the ability to save videos to watch offline. That may not seem like much of a perk in these Web-tethered times, but just think about the next time that you're hitting the road or experience an Internet outage.
YouTube hasn't fared well in the past when it has tried to offer premium channel subscriptions or pay-per-view streams, but things are different now. It's the right product at the right time. I signed up for the free one-month trial of YouTube Red on Wednesday. You will probably do so, too.
Motley Fool contributor Rick Munarriz owns shares of Netflix. The Motley Fool owns shares of and recommends Alphabet (A and C shares), Amazon.com and Netflix. Try any of our Foolish newsletter services free for 30 days. Check out our free report on one great stock to buy for 2015 and beyond.