The subscription business model is a business model in which a customer must pay a recurring price at regular intervals for access to a product or service . The model was pioneered by publishers of books and periodicals in the 17th century, and is now used by many businesses, websites and even pharmaceutical companies in partnership with governments.
44-457: YouTube Premium (formerly Music Key and YouTube Red ) is a subscription service offered by the American video platform YouTube . The service provides ad-free access to content across the service, as well as access to premium YouTube Originals programming produced in collaboration with the site's creators, downloading videos and background playback of videos on mobile devices, and access to
88-589: A "shoestring budget", but he maintained that "in order to scale up, it takes a different kind of enterprise, a different kind of skill set" such as story-telling and "showrunning". Prominent YouTube personality PewDiePie , who was involved in one of the planned originals for the service, explained that the service was meant to mitigate profit loss from the use of ad blocking . YouTube Red was officially unveiled on October 21, 2015. On May 18, 2016, YouTube Red and YouTube Music launched in Australia and New Zealand ,
132-520: A label's videos from public access if they did not agree to the new terms. In a statement to the Financial Times in June 2014, Robert Kyncl confirmed that these measures were "to ensure that all content on the platform is governed by its new contractual terms". Stating that 90% of labels had reached deals, he went on to say that "while we wish that we had [a] 100% success rate, we understand that
176-440: A music-oriented subscription option (YouTube Music Premium) slotted below YouTube Premium at a US$ 9.99 pricing, competing primarily with Apple Music and Spotify . The rebranding also came amid internal concerns that the previous "YouTube Red" name could be confused with internet pornography website RedTube . By July 2019, YouTube Premium and YouTube Music Premium were available in approximately 60 countries and territories with
220-649: A paid subscription model is being favoured by more publishers who see it as a comparatively stable income stream. In the field of academic publishing , the subscription business model means that articles of a specific journal or conference proceedings are only available to subscribers. Subscriptions are typically sold to universities and other higher education institutions and research institutes , though some academic publishers also sell individual subscriptions or access to individual articles. In contrast with other media such as newspapers , subscription fees to academic publishers generally do not go towards supporting
264-440: A perpetual licensing model to a subscription model, known as " software as a service ". This move has significant implications for sales and customer support organizations. Over time, the need to close large deals decreases, resulting in lower sales costs. However, the size of the customer support organization increases so that the paying customers stay happy. Consumers may find subscriptions convenient if they believe they will buy
308-422: A predictable and constant revenue stream from subscribed individuals for the duration of the subscriber's agreement. Not only does this greatly reduce uncertainty and the riskiness of the enterprise, but it often provides payment in advance (as with magazines, and concert tickets), while allowing customers to become greatly attached to using the service and, therefore, more likely to extend by signing an agreement for
352-924: A product or service , or, in the case of performance-oriented organizations such as opera companies , tickets to the entire run of some set number of (e.g., five to fifteen) scheduled performances for a whole season. Thus, a one-time sale of a product can become a recurring sale and build brand loyalty . Industries that use this model include mail order book sales clubs and music sales clubs, private web mail providers, cable television , satellite television providers with pay television channels, providers with digital catalogs with downloadable music or eBooks, audiobooks, satellite radio , telephone companies , mobile network operators , internet providers, software publishers , websites (e.g., blogging websites), business solutions providers, financial firms, health clubs , lawn mowing and snowplowing services, pharmaceuticals , renting an apartment, property taxes, as well as
396-404: A product regularly and might save money. The customer saves time for repeated delivery of the product or service. Subscriptions which exist to support clubs and organizations call their subscribers "members" and they are given access to a group with similar interests. Subscription pricing can make it easier to pay for expensive items since they can often be paid for over time and thus can make
440-576: A psychological phenomenon may occur when a customer renews a subscription, that may not occur during a one-time transaction: if the buyer is not satisfied with the service, he/she can leave the subscription to expire and find another seller. Because customers may only need or want some of the items received, this can lead to waste and an adverse effect on the environment, depending on the products. Greater volumes of production, greater energy and natural resource consumption , and subsequently greater disposal costs are incurred. Subscription models also create
484-472: A representative of ESPN's parent, The Walt Disney Company , stated that conflicts with third-party rights holders in regard to sports footage contained in ESPN's YouTube videos prevented them from being offered under the new terms. A limited number of older videos remain on ESPN's main channel. Similarly, a large amount of content licensed by Japanese record labels became unavailable in regions where YouTube Red
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#1732780354254528-428: A single purchase. In addition, subscription models increase the possibility of vendor lock-in , which can have fatally business-critical implications for a customer if its business depends on the availability of software: For example, without an online connection to a licensing server to verify the licensing status every once in a while, a software under a subscription-model would typically stop functioning or fall back to
572-512: A subscription price difference. On April 20, 2020, support was added for Unified Payments Interface for subscribers in India . In August 2021, YouTube began piloting a second subscription tier, "YouTube Premium Lite" in European markets such as Belgium, Denmark, Finland, Luxembourg, Norway and Sweden, at a price point of € 6.99. It contained only the ad-free viewing benefit. YouTube discontinued
616-471: A total availability in 119 markets. Following the Russian invasion of Ukraine , Google indefinitely suspended all of its all payment and subscription-based services in the country, including YouTube Premium. Subscription business model Rather than selling products individually, a subscription offers periodic (daily, weekly, bi-weekly, monthly, semi-annual, yearly/annual, or seasonal) use or access to
660-587: Is available. It was believed that the ability to download videos for offline viewing in YouTube Red was a subject of hesitation for Japanese media companies due to the need to monitor when, where, and how content is being used in accordance with Japanese copyright laws , hence their content was blocked under the new requirements. As of March 2024, YouTube Premium is available in most of the Americas, Europe and Oceania, as well as parts of Africa and Asia, with
704-433: Is important to have full access even to old files for decades). Also, consumers may find repeated payments to be onerous. Subscription models often require or allow the business to gather substantial amounts of information from the customer (such as magazine mailing lists), and this raises issues of privacy . A subscription model may benefit the software buyer if it forces the supplier to improve its product. Accordingly,
748-425: Is limited to paying subscribers. In addition to the freemium model, other subscription pricing variations are gaining traction. For instance, the tiered pricing model is frequently used in software as a service (SaaS) platforms, offering customers different access levels and features based on their subscription tier. This model is particularly effective for tailoring services to customer requirements. Another approach
792-461: Is not likely an achievable goal and therefore it is our responsibility to our users and the industry to launch the enhanced music experience". The Financial Times later reported that YouTube had reached an aggregate deal with Merlin Network —a trade group representing over 20,000 independent labels, for their inclusion in the service. However, YouTube itself has not confirmed the deal. Following
836-494: Is the usage-based pricing model, which calculates charges based on the extent of service or product utilization by the customer. This model is becoming increasingly prevalent, especially in services where customer usage varies significantly. There are different categories of subscriptions: In publishing, the subscription model typically involves a paywall , paysite , or other "toll-access" system (named in opposition to open access ). As revenues from digital advertising diminish,
880-595: The Premium Lite plan in October 2023. In September 2022, YouTube tested paywalling 4K resolution streaming of any YouTube video behind YouTube Premium. Amid criticism, this pilot ended in mid-October 2022. In April 2023, YouTube began to pilot a variant of this concept under which some videos offer an enhanced bitrate 1080p option. As of July 2022, in the United States the price of individual accounts on
924-610: The ad-free service; under the new contract terms, partners would receive a share of the total revenue from YouTube Red subscriptions, as determined by how much their content is viewed by subscribers. YouTube also sought to compete against sites such as Netflix , Amazon Prime Video and Hulu by offering original content (YouTube Originals) as part of the subscription service, leveraging prominent YouTube personalities in combination with professional producers. Robert Kyncl acknowledged that many of YouTube's prominent personalities had built their followings and created content while operating on
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#1732780354254968-460: The analyst knows who is an active customer and who recently churned. Additional benefits include a higher average customer lifetime value (ACLV) than that of nonrecurring business models, greater customer inertia and a more committed customer base as it transitions from purchase to opt-out decisions, and more potential for upselling and cross-selling other products or services. Some software companies such as Adobe and Autodesk have moved from
1012-414: The background, and in picture-in-picture mode on Android Oreo and newer. YouTube Premium also offers original content that is exclusive to subscribers, which is created and published by YouTube's largest creators. YouTube Premium offers original films and series produced in collaboration with professional studios and YouTube personalities , under the banner YouTube Originals . For multi-episode series,
1056-673: The benefits also extend out to YouTube Kids . Adamya Sharma of Android Authority argued that the service is only worth it for avid YouTube viewers and that a YouTube Premium subscription would not be worth it if the user did not use all of its features. Additionally, Sharma strongly criticized the manner in which YouTube nagged its viewers to subscribe to Premium and claimed that its attempts have driven users to competitor TikTok . Some have additionally noted that YouTube Premium's paid features can easily also be replicated with free online tools, particularly with YouTube video downloader tools replacing Premium's downloading feature and Adblock removing
1100-492: The creation of the content: the scientific articles are written by scientists and reviewed by other scientists as part of their work duties. The publisher does not pay the paper authors and reviewers. In this light, the subscription model has been called undesirable by proponents of the open access movement. Academic publications that use the subscription model are called "closed-access" in opposition to their open-access counterparts. Businesses benefit because they are assured
1144-524: The first countries to gain access to the service outside the United States. On August 3, 2016, YouTube Red support was added to the YouTube Kids app. On December 6, 2016, YouTube Red expanded to South Korea . On June 18, 2018, YouTube rebranded the service as YouTube Premium. The price of the service also changed from US$ 9.99 to US$ 11.99 per month for new subscribers. The existing pricing, as well as bundling of YouTube Premium with Google Play Music ,
1188-479: The first episode of a YouTube Originals series is available free. In selected countries where the service is not yet available, individual episodes can also be purchased through YouTube or Google TV . Access to YouTube Originals is also included in YouTube's separate streaming television service YouTube TV , but a YouTube Premium subscription is still required for the service's other benefits. In November 2018, it
1232-426: The functionality of a freemium version, thereby making it impossible (to continue) to use the software in remote places or particularly secure environments without internet access, after the vendor has stopped supporting the version or software, or even has gone out of business leaving the customer without a chance to renew the subscription and access his data or designs maintained with the software (in some businesses it
1276-485: The latter's own "All Access" service. Music Key offered ad-free playback of music videos from participating labels hosted on YouTube , as well as background and offline playback of music videos on mobile devices from within the YouTube app. The service also included access to Google Play Music All Access, which provides ad-free audio streaming of a library of music. Alongside Music Key, Google also introduced tighter integration between Play Music and YouTube's apps, including
1320-505: The music streaming service, YouTube Music , along with other benefits. It has over 100 million subscribers. The service was originally launched on November 14, 2014, as Music Key, offering advertisement-free streaming of music videos from participating labels on YouTube and Google Play Music. The service was then revised and relaunched as YouTube Red on October 21, 2015, expanding its scope to offer advertisement-free access to all YouTube videos, as opposed to just music. YouTube announced
1364-569: The need to pay to remove ads. In February 2024, the YouTube Premium service passed 100 million subscribers. In May 2014, prior to the official unveiling of the Music Key service, the independent music trade organization Worldwide Independent Network alleged that YouTube was using non-negotiable contracts with independent labels that were "undervalued" in comparison to other streaming services, and stated that YouTube threatened to block
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1408-544: The next period close to when the current agreement expires. In an integrated software solution, for example, the subscription pricing structure is designed so that the revenue stream from the recurring subscriptions is considerably more significant than the revenue from simple one-time purchases. Some subscription schemes (like magazines) also increase sales by not allowing subscribers to accept or reject any specific issue. This reduces customer acquisition costs and allows personalized marketing or database marketing . However,
1452-442: The opposite effect. This can be illustrated by subscribing to a service for mowing lawns. The effective use of a single mower increases when mowing for a collection of homes; instead of every family owning a lawnmower that is not used as much as the service-providing mower, the use of resources for producing lawnmowers, therefore, decreases while lawns stay cut. Google Play Music Too Many Requests If you report this error to
1496-492: The premium service is worth it for consumers, saying that in addition to including a music streaming service, the lack of ads and the ability to download videos and having videos played in the background is useful for consumers. YouTube releasing experimental features as well to subscribers was a benefit to Nield, which as of writing included the rollout of pinch to zoom in videos. Ashley Maready of The Motley Fool concurred with Nield in her review, while additionally noting that
1540-425: The product seem more affordable. On the other hand, most newspaper and magazine-type subscriptions are paid upfront, which may prevent some customers from subscribing. Fixed prices may be an advantage for consumers who frequently use those services. However, it could disadvantage a customer who plans to use the service frequently but later does not. The commitment to paying for a package may have been more expensive than
1584-512: The rebranding of the service as YouTube Premium on May 17, 2018, alongside the return of a separate, YouTube Music subscription service. Later in the year, it was reported that YouTube was planning to make some of the original content associated with the service available on an ad-supported basis. The service was first unveiled in November 2014 as Music Key, serving as a collaboration between YouTube and Google Play Music , and meant to succeed
1628-405: The service was increased to $ 13.99 per month ($ 18.99 if purchased via Apple App Store) A YouTube Premium subscription allows users to watch videos on YouTube without advertisements across the website and its mobile apps , including the dedicated YouTube Music and YouTube Kids apps and services. Through the apps, users can also save videos to their device for offline viewing, play their audio in
1672-496: The sharing of music recommendations, and access to YouTube's music videos from within the Play Music app. Music Key was not YouTube's first foray into premium content, having launched film rentals in 2010, and premium, subscription-based channels in 2013. During its invite-only beta, Music Key faced mixed reception due to the limited scope of the offering; YouTube's chief business officer Robert Kyncl explained that his daughter
1716-413: The system requires that the business have an accurate, reliable, and timely way to manage and track subscriptions. From a marketing-analyst perspective, the vendor has the added benefit of knowing the number of currently active members since a subscription typically involves a contractual agreement. This so-called 'contractual' setting facilitates customer relationship management to a large extent because
1760-482: The traditional newspapers, magazines, and academic journals . Renewal of a subscription may be periodic and activated automatically so that the cost of a new period is automatically paid for by a pre-authorized charge to a credit card or a checking account. A common variation of the model in online games and on websites is the freemium model, in which the first tier of content is free. Still, access to premium features (for example, game power-ups or article archives)
1804-406: The unveiling of YouTube Red, it was stated that these same contractual requirements would now apply to all YouTube Partner Program members; partners who do not accept the new terms and revenue sharing agreements related to the YouTube Red service will have their videos blocked entirely in regions where YouTube Red is available. The YouTube channels of ESPN were a notable party affected by the change;
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1848-475: Was confused over why videos of songs from Frozen were not "music" in the scope of the service, and thus not advertisement-free. These concerns and others led to a revamping of the Music Key concept to create YouTube Red ; unlike Music Key, YouTube Red was designed to provide ad-free streaming to all videos, rather than just music content. This shift required YouTube to seek permission from its content creators and rights holders to allow their content to be part of
1892-463: Was grandfathered in some countries for those who subscribed prior to the rebranding. Alongside the rebranding, the service also expanded into Canada, and 11 European countries (Austria, Finland, France, Germany, Ireland, Italy, Norway, Russia, Spain, Sweden and the United Kingdom). The rebranding came alongside the re-launch of YouTube Music as a music streaming service , which reintroduced
1936-540: Was reported that YouTube was planning to offer some of its premium shows available for free on an ad-supported basis by 2020. The Premium subscription would still cover ad-free access, timed exclusivity windows for original content, and content that is not made freely available. YouTube significantly scaled back its YouTube Originals program in January 2022. Reception to YouTube Premium has been mixed amongst consumers and journalists alike. David Nield of Wired argues that
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