YouTube said Wednesday it will soon launch a new subscription-based service that will let users watch videos on the website without annoying ads interrupting the clips.
The streaming video website, which is owned by Google (GOOG), reportedly disclosed the planned paid service in an e-mail sent to producers of top video content and obtained by various media outlets. The e-mail did not say how much the subscription would cost or when it would become available. However, Bloomberg cited an anonymous source who said the paid service would be available before the end of this year.
YouTube also reportedly plans to update its terms of service for video partners, effective in June, to give them a 55% cut of subscription revenues, according to TechCrunch. Current YouTube content creators — including social media stars like Michelle Phan — already get a similar share of ad revenues.
Last fall, reports surfaced claiming YouTube was considering an ad-free, paid service as part of its effort to boost revenue (and, eventually, turn a profit), but the company had offered no confirmation until now.
The subscription will be Google and YouTube’s latest attempt to diversify beyond the ad-based business model for the more than a billion users who visit the streaming video site monthly. In November, YouTube introduced a test version of Music Key, the website’s ad-free, subscription music service that will cost $9.99 a month. YouTube already offers top-flight videos on certain paid channels and users can also rent or buy moves through the site.
Wednesday’s disclosure comes at a time when Google and YouTube are facing stiffer competition than ever from rival online streaming services, such as Netflix (NFLX) and Hulu. Netflix, in particular, has been adding original content including television series and movie deals with big names like Adam Sandler to better compete with more traditional media outlets. Amazon (AMZN) has followed suit, adding critically acclaimed original content to its own Prime Instant Video service.
Meanwhile, traditional media outlets like HBO and CBS are also building their own subscription-based services, while startups such as Vessel — a paid video site created by former Hulu CEO Jason Kilar — are taking aim directly at YouTube’s users.
