YouTube Red is a damn good idea, and I'm not even going to qualify that statement. You know why it's a damn good idea? Because YouTube needs to grow up, and step one is getting rid of those garbage advertisements we all love to hate so much. Step two is convincing average, rational human beings that maybe, possibly, they could see themselves in a world in which they might actually pay to more conveniently watch the things and people they really, really, really like to watch.
At the moment, and probably for a while yet, basically all of YouTube's revenue comes from advertisements. I am as far from a YouTube expert as one could possibly get, but the basic principles aren't rocket science. Through a set of algorithms based on subscribership, average video view length, monthly minutes watched, number of views, and factors like location and other listener data, YouTube picks an ad for a creator's video and then pays out a sum of money for each impression that ad receives, and that amount varies on the lock-in time of the ad, how long a user stays after the lock-in, and the aforementioned factors above that decide which ad to serve in the first place. This, by the way, is why it is so hard to get an answer to the question "how much money do you get from YouTube ads" on Google, because the answer is, like a great many things in life, "it depends."
First, fact: ads suck. We all are generally somewhere between begrudgingly tolerating them and outright hating advertisements on the internet. No one likes to be force-fed a steaming spoonful of corporate marketing sludge every time they go to watch a 30 second video clip. It's like asking if you enjoy waiting in line at the grocery store or going to the DMV: no one likes it, but everyone kind of just has to deal with it. For YouTube creators, this means they already have an adversarial relationship with their viewers right out of the gate - lock-in timers on ads are the number-one reason YouTube ad blockers exist (and work quite well, from what I've read). When people use ad blockers, nobody wins. That's not to demonize people who use them, because it's very understandable why they do: ads are annoying, and getting rid of ads makes for a less annoying world. We have to deal with marketing and advertisements in our daily lives regardless of the ones on the internet, and minimizing that exposure can make our lives just that little bit more peaceful and less aggravating. Even as someone who is literally paid by ad revenue, I get it!
Advertising is also a fickle, unpredictable beast. Internet display advertising has some of the lowest ROI (return on investment) for advertisers (and increasingly, publishers) of any medium in existence. While YouTube has a more mixed reputation in that regard, be honest: how many times have you clicked a YouTube text ad out of legitimate interest? I've watched a movie trailer pre-roll all the way through a handful of times... ever, but that's the deepest I've ever gone down the YouTube ad rabbit hole as a viewer. And as a stick in the eye of the advertisers, those were videos I probably would have watched anyway, on YouTube, of my own free will. There was no good reason to pay YouTube to get me to watch them.
And this is the reality of our world. People have become so bombarded by ads on the web that they either just ignore them entirely or actively seek to block them in the first place. Advertisers are well-aware of this, and ad revenues for content creators are dropping in response. While revenue for companies like Google continues to increase, it's generally accepted that increased ad spends are a function of greater global economic success as a whole, not an increase in the value of web-based advertising itself. If anything, the value of those ads (aka CPC, or cost per click) is dropping consistently, and has been for some time. For YouTube, a place that more and more is home to some of the internet's brightest video content stars and even considerable production investment, advertisements are a terrible long-term strategy. Banking on the ad market to support costs of production that rise astronomically as the quality and frequency of content rises to the level Google would have its top creators aspire to is just not a good idea, and even Google knows this. Google has thrown money at YouTube creators to stay with the network and even now has "spaces" in New York and Los Angeles (and elsewhere) where creators can film their content and get tips from the pros. I've been to the YouTube Space LA, and it's pretty awesome. (Unrelated: they also usually have really good food trucks cater events there!)
While The YouTube Channel Initiative that Google launched years ago as a way to seed funding to up-and-coming original creators on YouTube died a while back after failing to succeed in a big way, it's long been suspected that the company is still quietly engaging in monetary incentives to keep its biggest stars around. New attempts to monetize loyal viewers through channel-based subscriptions have also failed, and frankly, I don't blame anyone for that: they were kind of a terrible idea - no one is going to pay multiple channels $5+ a month just for exclusive content.
But a single, all-in subscription that grants you ad-free viewing, offline saving, and background playback to the entire YouTube kingdom (not to mention Play Music)? What is wrong with that? If you hit up Twitter, you will find out that there is lots wrong with it from people who, you know, use YouTube, and therefore are experts upon what is and is not a desirable business model for the service.
Basically, complaints stem from the paywall aspect. Certain content will only be available to YouTube Red subscribers, like PewDiePie's new series, and this has some people very upset that their favorite channels could go behind the big Red curtain for good. To be clear: those fears are pretty ridiculous. Red-only content is created by YouTube in partnership with its most successful stars, and those stars aren't about to stop making content for the 99% of people who won't sign up for YouTube Red yet, because that would be a non-strategy. Instead, YouTube Red will act as an incubator for high-quality, high-production-value content that showcases the talent and creativity of the platform's most successful faces. It will be a way to get even more stuff from your favorite people and sources, should you choose to pay for it. Anyone upset about this is, in essence, complaining about not getting something they already didn't have. Which makes no sense.
To jumpstart the whole "getting people to use this thing" process, Google is including all current Play Music subscribers in the US on Red immediately. And Red is only in the US to start, like most Google products, which of course is starting its own giant, rapturous fit on the web. But do you see riots on the internet when Amazon or Netflix debut a new show on their subscription video services that aren't available in many countries? Shockingly, no, and people elsewhere in the world just go on pirating said shows like they were going to anyway because they knew they weren't going to get a chance to pay for this stuff legitimately to begin with. People outside the US: I promise you, all the Red-exclusive content worth watching is going to get pirated faster than a washed-up ocean documentarian's vault in unprotected waters. It's not a great solution, but I find it a bit disingenuous to see people playing the "we'll never get any of this content in <X>" card when they know full well that has never stopped desirable content from flowing through generally-accessible if illicit channels to every corner of the internet-connected earth. I realize they won't get the ad-skipping and offline saving, and that sucks, but the maze of copyright issues and licensing to do this abroad is probably something Google is working on - it's not like they don't want your money. I certainly hope Google gets its ass in gear and puts Red out in as many countries as possible, at least all the ones that already have Play Music.
YouTube Red: All those things you asked for. Repeatedly. For years.
Anyway, the idea behind YouTube Red is breaking ad-supported content away from subscriber-supported content. This is important. Advertisers are interested in one thing and one thing only: return on their ads in the form of new customers. They don't care about "community" (a term being thrown around like crazy among Red naysayers), they don't care about quality content, and they pay money solely to get as much time in front of your viewers' eyeballs as possible. They couldn't care less about making YouTube a better place for high-quality video. And so, instead of channel creators focusing on the business of making videos alone, they're also focused on how to position their channels for the best ad customers, what their demographic is, and how YouTube ads work. While this system allows (and will continue to) new YouTubers to get off the ground because of its anyone-can-get-into-it model and approach, it also means that even if you're successful, your revenue sits on a knife edge of ad performance and the ad market itself, things which are highly uncertain variables. Also, did I mention declining ad revenues for publishers and the fact that they're declining? They're declining.
By switching to a subscriber-based revenue model for certain content, the creators of that Red-only content can focus on one thing when they produce that content, and one thing only: making videos they know their subscribers will want to watch. That's it. It's a more direct business relationship between viewers and creators. Viewers' subscription revenue will be apportioned to content creators based on a number of factors directly such as minutes viewed, instead of having to rely on the ad-buyer middleman placing a value on a given video and a given viewer. With YouTube Red, creators are paid based on the number of minutes their videos are watched as well as impressions, but two of the old key factors - the amount of time someone spends watching an ad and the actual ad served - are now moot. Minutes viewed was a factor in YouTube payouts already, but mostly in the sense that it determined the value of your viewers as ad impressions and would get you ads with long lock-ins and well-performing ads with high CPC. YouTube Red could encourage well-produced, long-form videos without the fear that creators would feel on the current model: that their video was being dramatically undervalued by having the same, single, lowly ad a video around 5 minutes long did.
Finally, Red creators will continue to make most of their content free and ad-supported for the vast majority of their viewers, but they'll also tease an intriguing, exclusive bill of content for their most devoted fans with the promise of no ads on YouTube ever again and offline playback and a free Play Music subscription. These are not tiny features - they're hugely desirable. And for $9.99 a month, YouTube is well within striking distance of Amazon, Netflix, and Hulu. The one question that remains for me is whether or not people are actually interested in YouTube content enough and the features of Red to pay for it. Of the channels I subscribe to, I know I am, and I am a strong supporter of independent content on the web. Channels like Chris Harris On Cars, The Smoking Tire, and Regular Car Reviews are all things I would love to know I was supporting more directly with a monthly subscription fee while simultaneously getting rid of ads and gaining other new features across the whole of YouTube.
So, let's take a step back and think about what YouTube Red really is: a chance for YouTube to be a place where subscribers support their favorite content directly instead of, for example, by getting blasted with some awful get-rich-quick ad from one of the internet's biggest douche-canoes. I'm personally much more amenable to putting that money directly into the pocket of the person who created the video by watching the video, not by watching or seeing an arbitrary and often cringeworthy advertisement. As for the cat videos? They'll still be there tomorrow if you don't want YouTube Red.