Would you pay for YouTube Pro?
Forget YouTube Premium. What would happen if the video-sharing titan created a more aggressive yet affordable paid subscription service?
Anyone who has been interested in Moore’s Law and its basic tenets, or who has read Free: The future of a radical price, Chris Anderson’s influential book from 2009, is well aware that throughout history there were products and services that saw their prices dwindle to zero or something very close to zero. It happened with transistors, music, hard drives (the cost per byte of storage media) and a few others. At some point, their price tag simply dropped to a negligible value of $0.000… something.
In his book, Anderson mentions Google on countless occasions — including the classic “this is the Google Generation, and they’ve grown-up online simply assuming that everything digital is free” — and dedicates an entire chapter to examine the company’s free services, from cloud-based apps to YouTube. Probably because he was the editor-in-chief at Wired until 2012, Anderson, however, practically ignores all journalistic products. The New York Times’s business model, for example, is boiled down to two lines, and the rest of news media, don’t even get that far.
Why does it matter? Because incredible as it seems, if you’re paying $7.99 for Hulu or $9.99 for Spotify today, the pricing chaos instigated by news outlets over the last two decades is as much to blame as Google’s unbeatable $0.
Anderson also missed the opportunity to explain that this direct correlation, of course, works both ways. If Google’s business model logic was distinct, the pressure on pricing for other digital products and services would also be entirely different. Moreover, some of the most popular digital platforms in the world — Facebook, Instagram, YouTube, Twitter etc. — could have taken the opposite path: abandoning the Fabulous Land of Free to develop their own subscription strategy — a totally different world from the one we live in.
Today is too easy to predict that, in a scenario like this, Facebook would be endangered. Even if its subscription cost $1/month, the vast majority of the 2.7 billion Facebook users would probably leave Mark Zuckerberg’s social network without hesitation. Ten years ago, however, this projection wouldn’t be so simplistic, and this finding alone shows how significant the link between pricing, value, and timing can be.
Zuckerberg wouldn’t be alone though. Among those who wouldn’t last the 30-day-trial period, you can add SnapChat and Pinterest — even if they were offering a bargain price packed with perpetual discounts and a promotional cutlery set (you know, like newspapers).
But what about YouTube, the fan favorite from Chris Anderson’s book? How would users react if Google decided to turn it into a paid service overnight?
As everybody knows, there is already a paid YouTube. Not only one, but two actually: YouTube Premium (formerly known as YouTube Red) and YouTube TV. Let’s discard YouTube TV because it’s a streaming service that offers live TV and cloud DVR storage and therefore is not part of the scope of this fanciful exercise. YouTube Premium, on the other hand, is another story. For $11.99 (price varies by country), users get the same YouTube as everyone, but without the ads. They can also download videos to watch later and play them “in the background”, when they minimize the app. And that’s pretty much it. At the time of this writing, YouTube Premium had 30 million subscribers (1.5% of the 2 billion active users of traditional YouTube).
The paid YouTube that intrigues me, however, is quite different. Forget about YouTube Premium, which charges too much and offers too little, and welcome to YouTube Pro.
Does it exist? No, but for the purpose of this conversation let’s assume it does.
Let’s say the company decided to SnyderCut its paid service and transform it into something truly efficient, which I christened with the least original tag possible: “Pro.” When it started, in 2005, YouTube was an amateur video platform that doesn’t remotely resemble what it is today. A year and a half after the site went online for the first time, Google bought it for $1.6 billion, an amount that YouTube makes in a month now. Clearly, it’s past time to give it a “Pro” treatment.
And how would YouTube Pro work? For one thing, all channels with more than 100,000 subscribers migrate to the Pro version and cease to exist on regular YouTube effective immediately. Wait, what? Exactly, and that’s not all: all videos that reach a TBD amount of views — say, 1 million — even if it belongs to a channel with less than 100k subs, will also pass to the other side of the “Pro” paywall as soon as they reach the pre-stipulated mark.
Does it mean that all those channels we are used to watching regularly, and all the viral videos we occasionally watch will no longer belong to that Fabulous Land of Free? Yes, you heard correctly. The “Pro” umbrella won’t just house mega-popular YouTubers like PewDiePie, Mr.Beast or that Diana kid. Everyone in the range of 100k (Daniel Inskeep), 1 million (Shelby Church), 5 million (Peter McKinnon) or 15 million subs (MKBHD) will only be available on YouTube Pro.
Now let’s take five because this is the part where the delusion of some fans who believe their favorite YouTubers would never accept this “deal” comes in to impart some nonsense moral lesson.
I’m sorry, but making sure that content creators won’t “rebel” against the forced transition to YouTube Pro is the least of the problems. The easiest way to settle it is to tweak the monetization rules and requirements on YouTube Partner Program: the new Pro members will gladly accept the mission, and some of them will even record a video or two to praise the changes: “7 Tips for Growing Your New YouTube Pro like a Pro.”
Thus, with one stunt, YouTube Pro will incorporate all channels that today are responsible for more than 90% of viewership, while the traditional free of charge YouTube will be rerouted to its original purpose, a video sharing platform for weddings, ballet performances, special journalistic pieces that no one bothered to watch… this type of thing.
So, what would be the reaction of the 2 billion YouTube users? How many would give in to the Pro version and how many would leave the site, as in the fictional Facebook example?
Before you think about the answer, here’s one more piece of information: among the popular streaming platforms that adopted paid subscription as a business model, Netflix and Amazon Prime have 200 million and 160 million subscribers, respectively, while Disney+ reached 95 million recently. Spotify has 300 million active users, but only 1/3 comes from paid customers.
Now, finally, how many would pay for YouTube Pro?
Those who answered “depends on the price” just won a year of the “Pro” subscription in this fictitious universe. Three years ago, when I wrote “How many subscriptions can you afford?,” I put together a formula to estimate how much each of those free platforms could charge, according to the minutes/month ratio of user. It is a dated and inaccurate formula, but we’ll use it anyway: back then my formula surmised that a fictitious paid YouTube version could cost $9 a month, or $8.99 to embrace the left-digit effect.
So at $8.99 per month — $3 cheaper than the existing Premium iteration — how many subscribers would YouTube Pro be able to convert?
As this is a work of fiction, there’s no right answer. Given the position that YouTube holds today, this make-believe “Pro” variant would certainly overtake the real YouTube Premium by a large margin, and would probably reach the level of Spotify and Disney+ (100 million each) easily.
Yet the reason of this entire exercise is not guessing how many users would pay for YouTube or Facebook, let alone diminishing the theory of free dissected in Anderson’s book. The most important thing about this creative effort is to understand the triad composed of pricing, value, and timing.
As I mentioned earlier, although it’s kind of easy to guess that a lot of people would pay for YouTube and the vast majority would never spend a cent on Facebook in 2021, this conviction wouldn’t be so simple in 2010, for example, when YouTube was available in only 24 countries, and Zuckerberg was Time magazine’s Person of the Year.
Likewise, it is simply impossible to predict who will remain relevant enough 10 years from now to be able to charge $8.99, $11.99, or $14.99 a month — and that goes for all the subscription services, from streaming platforms to newsletters, from videogame memberships to journalistic products.
These three elements — pricing, value, and timing — form a kind of “rule of three” that is rarely triggered when it comes to social platforms because these companies are governed by another rule, the one that says the Google Generation assumes that everything digital is free. The first irony here is, this same triad is the one that today disquiets streaming services, haunts pay TV and buries the pretensions of almost all journalistic projects — even though they’re all digital businesses. The second irony is, as in mathematics, by having the three “numbers” from the rule of three you can actually solve the problem.
If Free: The future of a radical price is a great rite of initiation to dive into the $0 price tag universe, there is another highly acclaimed book about pricing that helps understand all the other prices that are not $0. Confessions of the pricing man (2015), by Hermann Simon, errs in the judgment of most digital businesses — the Netflix case is incomplete, for instance, and media outlets, as in Free, are solemnly ignored —, but it brings a series of great examples that help to develop strategic thinking around pricing and some very nice quotes, like this one: “There is always one ‘right’ price or price structure and a multitude of ‘wrong’ ones. The Russians have a saying which sums this up: ‘In every market there are two kinds of fools. One charges too much, the other charges too little.’”
Good thing digital businesses are not exactly Simon’s field of expertise. Otherwise, he would come to the conclusion that this Russian saying is missing a third “kind of fool,” the one that manages to make both pricing mistakes: charging too much and too little for the same product.