YouTube Red sets ablaze web economics

This article was first published by dmcityview.com

A common intro to economics question asks “Would you be okay with free phone service if in exchange your calls were interrupted with frequent commercial breaks?” At first the student immediately is drawn to answer yes, because the word free is so attractive, but after a moment the thought creeps if the service is truly free if you’re subject to advertisements. Our lives are inundated with ads; television ratings weight shows for proper ad rates, newspapers and magazines would cost a fortune if they didn’t run them, and millions of websites subsist on them. Now one of the biggest online advertising delivery platforms is offering users the inverse of that economics riddle; Would you be willing to pay for YouTube if it meant no longer seeing advertisements?

Even though that question pushes the respondent to forgo “free,” heavy YouTube viewers do not care. YouTube is the number one streaming media website. There are billions of videos on YouTube and until recently the site has employed advertisements to pay for their storage and delivery. While ads are a common annoyance online, YouTube video and overlay ads are an inescapable plague. With pre-roll, internal, and sometimes post-roll advertisements, visitors who watch dozens of YouTube videos a day, can sometimes encounter twice as many ads videos. Given the incessant, repeating nature of online ads, that torrent of commercials can be infuriating.

For all the issues YouTube has (too much content, rampant commenter bigotry, content piracy, vapid video bloggers, etc.) too many commercials are it's users number one complaint. Finally after 10 years of ad delivery, the site has finally offered a way for visitors to bypass this blight and it’s called YouTube Red. Starting last week, YouTube junkies can pay $9.99 a month for the ability to never see another YouTube ad again, download videos to view when they don’t have a data connection, and play videos in the background users leave the YouTube application for another smartphone app.

Now back to our economics lesson; why would anyone pay for a service that perceived to be free? Doesn’t that go the first commandment of the internet? Well beyond the unrelenting nature of its ads, one of YouTube’s most common uses is for streaming music. Nevermind Spotify, Apple Music, Pandora, Rdio, or Tidal, YouTube has the largest collections of audio tracks on the internet worldwide web and has 10 times the user base to boot.

Youtube hosts hundreds of millions of music recordings, performances, podcasts, stand up routines, audio books, and speeches. Joining YouTube Red means you can stream all that content with zero commercial interruption. As an added bonus, YouTube Red membership gives you free access to Google’s music streaming app; Google Play Music. So if YouTube Red takes off, it could be curtains for competitors.

Of course there’s always “The Cat Argument.” Just as fools disregarded Twitter or Instagram for being trivial services to share photos of their lunch, YouTube is frequently disparaged for only hosting insipid cat videos. While YouTube does have plenty of kittens, it is also the number one DIY tutorial, educational, promotional, and entertainment space on the internet. If you search for any hobby or interest on YouTube, you are guaranteed to find hours of content to bide your time.

So will YouTube’s hundreds of millions of users break the first commandment of the internet and pay to stream cat videos? Most assuredly not. YouTube is most likely counting on 5% or less of it's users joining at first, but once word spreads about its Spotify killing capability I’d say all bets are off. At the very least, I say try the free month Red trial. Who knows maybe you’ll love ad-free YouTube life.



Patrick Boberg is a central Iowa creative media specialist. For more tech insights, follow him on Twitter @PatBoBomb

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