Google to offer ad-free YouTube subscriptions as soon as this year

MOUNTAIN VIEW (CALIFORNIA) — Internet giant Google plans to offer a subscriber version of YouTube as soon as this year, letting viewers see millions of videos without having to sit through ads.

Revenue from the new feature, which will put Google into more direct competition with streaming services such as Netflix and Hulu, will be shared with video creators, Google told them in an email that was obtained by Bloomberg. The service may debut by the end of the year, said a person with knowledge of the matter, who asked not to be identified because the plans aren’t public.

“By creating a new paid offering, we will generate a new source of revenue that will supplement your fast growing advertising service,” the letter said.

Google has been moving closer to charging users for content: The Web company introduced a subscription-style music service within YouTube in November, and has spent hundreds of millions of dollars on talent and production facilities to boost original content on the video website, which has more than 1 billion monthly viewers.

With ad-free subscriptions, Google is moving closer to competing with streaming services, including HBO Now, for people’s attention as they spend more time watching videos on the Web and on mobile devices.

“While we can’t comment on ongoing discussions, giving fans more choice to enjoy the content they love and creators more opportunity to earn revenue are always among our top priorities,” YouTube said in a statement, without commenting on the timing of the service.

YouTube will offer all the same videos without ads for a monthly fee, which hasn’t been set yet, according to the note. The service is also likely to include offline access. Google is alerting content creators because it wants them to agree to new terms that would let it include clips in the subscription product.

“We are increasingly moving into an age where consumers are learning to avoid advertising. Between DVRs, Netflix and now Amazon, we are increasingly learning to lead an ad-free life,” said Mr Rich Greenfield, an analyst at brokerage BTIG.

The move to introduce subscriptions is part of a broader shift at Google to generate more income that is not based on advertising. Viewers can rent or buy movies such as “Interstellar” or “The Interview” on YouTube. YouTube had already started paid channels for premium content in 2013. And YouTube’s Music Key Beta, rolled out five months ago, lets users access music on the site without ads for US$10 (S$13.55) a month.

“Anything they do to improve monetisation options is great for a content creator. I believe in their ability to create a subscription product. Their market position is so strong that it’ll be hard for me to believe it could fail,” said Mr Keith Richman, president of online video producer Defy Media. BLOOMBERG