Google prepares YouTube subscription plan

Google is preparing to launch a YouTube subscription service that will allow users to skip advertisements when watching online videos.

In an email sent to the creators of YouTube videos, who get a share of the advertising revenue generated by their work, it said it was taking "another bold step in favour of choice" by offering an ads-free version of YouTube for a monthly fee.

The move could increase competition with other online video services which already charge subscriptions such as Netflix and Hulu. Creators will receive revenue from the fees but the letter did not say how much it would charge or how the fees would be split.

"By creating a new paid offering, we'll generate a new source of revenue that will supplement your fast growing advertising revenue," the YouTube team wrote in the email, which asked recipients to update the terms of their contracts for the new service.

The email implied the service could come as early as this year, saying: "It's an exciting year for YouTube, as we push into uncharted territories."

YouTube is already working on a subscription service for its music videos, which is in beta testing, and users can subscribe to individual channels such as sports or language instruction channels, to watch their videos without ads.

Most YouTube content is short form videos, often uploaded by individual creators or vloggers rather than the expensively produced TV and movie content such as House of Cards or Modern Family seen on Netflix and Hulu.

But users have been able to buy or rent individual movies and TV shows for a couple of years, and this move could attract more professional content, opening the way for a service that could prove a more serious threat to other companies offering streaming subscriptions.

As younger consumers turn away from their TVs and reject costly cable subscriptions, YouTube could be among the technology company beneficiaries. Apple is also planning an online TV service, which it will serve through its Apple TV set-top box, according to people familiar with the matter, while Amazon streams content, including some original programming, to customers of its Prime service.

A YouTube spokesperson said: "While we can't comment on ongoing discussions, giving fans more choice to enjoy the content they love and creators more opportunity to earn revenue are always among our top priorities."

YouTube faces competition from an increasingly video-focused Facebook, which has seen a surge in the number of videos shared on the social network and is ploughing into the online video advertising market.

YouTube made $1.12bn in net video advertising revenues in the US in 2014, according to eMarketer, which expects the site's share of the total US digital video advertising market to slip from 19.3 per cent last year to 17.7 per cent by 2017.

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