YouTube offers U.S. subscribers paid option with no ads

Image: People are silhouetted as they pose with mobile devices in front of a screen projected with a Youtube logo, in this picture illustration taken in Zenica October 29, 2014. REUTERS/Dado Ruvic/Files

By Lisa Richwine

LOS ANGELES (Reuters) – Alphabet Inc’s YouTube will launch a $10-a-month subscription option in the United States on Oct. 28 that will allow viewers to watch videos from across the site without interruption from advertisements, the company said on Wednesday.

Starting early next year, the service called YouTube Red will add exclusive shows and movies from top YouTube creators including PewDiePie, Lilly Singh and The Fine Brothers.

“Consumers are embracing paid subscriptions of ad-free content at an incredible pace,” Robert Kyncl, YouTube’s chief business officer, said at an event at YouTube’s production space in Los Angeles.

The effort offers a new source of revenue for YouTube and its video creators. Rival streaming sites such as Vessel and Interactive Corp’s Vimeo are luring online stars to their paid offerings, which provide creators a larger cut of revenue than they typically receive from YouTube’s ad-supported videos. Facebook also is taking steps to boost video viewership on its site.

YouTube will continue to offer its free, ad-supported service, which has more than 1 billion viewers around the world.

Creators of 99 percent of the content watched on YouTube have agreed to make their videos available on YouTube Red, Kyncl said. YouTube is still negotiating with a “few” media companies that he hopes to bring on board before the launch, he said. Walt Disney Co was still talking with YouTube as of Tuesday, according to a source familiar with the discussions.

A Disney spokeswoman did not immediately respond for a request for comment.

The YouTube Red service will be available initially only in the United States. The company aims to expand it to major markets around the world over the next year. Users who sign up for YouTube Red through Apple Inc’s app store will pay $13 a month.

Officials said the majority of revenue from subscriptions will go to video creators, though they declined to provide details. For ad-supported videos, YouTube typically keeps 45 percent of revenue.

Kyncl said YouTube Red is targeted at the same audiences that make up the bulk of YouTube’s audience now, including gamers and young women.

YouTube also launched a new YouTube Music app that is free to watch with ads. Subscribers to YouTube Red can watch YouTube Music content without the ads.

(Reporting by Lisa Richwine; Editing by David Gregorio and Diane Craft)

Copyright 2015 Thomson Reuters. Click for Restrictions.