Future of Membership Sites Amid YouTube Premium Crossing 100 Million Users

YouTube's attempt at Premium Membership

YouTube announced an ad-free music listening experience ‘Music Key’ at $10 a month in 2014. It was still in beta when the next year, they renamed it as YouTube Red and launched it as a $9.99 a month subscription. Red subscription gave users exclusive content, an ad-free experience, offline viewing and background video playing among other features. This membership also extended to the then newly launched YouTube Gaming and Music apps.  

The initial response to YouTube Red was at best a mixed one. Some creators anticipated this to add to their income on top of what they made from the partner program. Others, especially musicians felt the labeling was a bit too invasive and by definition non-negotiable. Even from the audience’s perspective, the membership did not make sense as most of the features like ad-blocking, picture-in-picture and background play could be achieved using third-party tools. So back then, the offer of YouTube Red did not appeal to the YouTube mass.

Rise of YouTube Premium

In 2019, they rebranded it as YouTube Premium and relaunched the YouTube Music app globally. This time, however, it gained a little more traction and finally this year in January, it gained 100 million premium subscribers. Lyor Cohen, Global Head of Music, YouTube says, “In 2015, many doubted a subscription model could thrive on YouTube. They said the market was crowded and our platform was too different.” Referring to the growing number of premium subscribers, he says it is this very distinctiveness which is driving their success.

Reasons for this success also includes YouTube’s crackdown on third-party ad blockers and video downloaders, which naturally narrowed down the users’ options. Moreover, they are not clear whether the user count includes the free trial users or not.

Be that as it may, YouTube had to do two things or at least survive long enough till these two things happened naturally:

- Change people’s perception of YouTube as a free source of video consumption

- Bring in a sense of community among video consumers to financially contribute to their favorite creators

But more than that, if we look at the primary reasons why people switch to YouTube Premium, we find the reason is pretty basic: People love the ad-free experience.

Mixed Responses to YouTube Premium

In a post on Reddit, a redditor asked why people hate YouTube premium. Some redditors commented they, in general, do not agree with YouTube’s policies or how it treats the creators and users. Others considered the platform taking away even the basic features and putting those behind a paywall was a low-blow. But then there was a section of commenters who said they loved YouTube premium. Firstly, because the features were actually adding on to their video watching experience and secondly, they felt they were contributing to the creators (although ad-revenue sharing is a real piece of work).

Subscription and the Video Streaming Industry

While it makes sense for YouTube to do what they are doing and for the users to love or hate what they love or hate, we believe creators deserve more and that is a separate discussion. But what does this growing number of YouTube premium subscribers indicate? That the idea of buying a subscription for media content for an enhanced, personalized experience is not alien anymore. All thanks to the subscription giants. As a matter of fact, we can observe that the whole media industry is moving towards a subscription model (or one of its variants).

According to a study, the population using video streaming services is expected to be 18.3% in 2024 and is projected to reach 20.7% by 2027 worldwide. Also, the average revenue per user (ARPU) is expected to amount to US$76.58 by the end of this year. In terms of the total number of users, it is projected to grow to about 1.6 billion users by 2027.

Along with the figures, there is a change in people’s attitude towards subscriptions, especially in all wings of media. While to some degree the discussion about streaming app fatigue might be true but it all boils down to the value subscribers get from their subscriptions. It does not matter if this value is in the form of high quality unique content or a sense of control or some form of validation from the creators, if it exists, fans will follow. Foundation of the prejudice against paying for online content has shaken and YouTube Premium’s success is a proof of that.

Marketing strategist Bob Gilbreath talks about this change in consumer behavior. He says, “Media consumption is moving from advertising to subscription-supported models.” According to him, we are closer to a consumer-controlled world, and advertisers must find alternative ways to do business. What’s interesting is Gilbreath’s use of the term ‘consumer-controlled world’. The consumer wants to be in control, the consumer demands a no-nonsense experience and the consumer wants exclusivity.