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YouTube Mulls Offering Ad-Free Subscriptions

Fans of YouTube who would rather not see those “You can skip this ad in 5 seconds” popups before their video of choice starts playing might one day have the option of an advertising-free, paid subscription service. Speaking at Re/code’s Code/Mobile conference this week, YouTube CEO Susan Wojcicki said the Google-owned company is “thinking about how to give users options.”

YouTube already has a program in which some content creators can offer paid monthly subscriptions to their programming at rates starting at 99 cents per month. Its paid-channel page lists 222 content providers that have chosen to go that route, include National Geographic Kids, Docurama Films and Sesame Street: Monthly Pass.

Most of YouTube’s revenues, however, come from advertising sales. While Google does not provide separate revenue data for YouTube, an analysis by eMarketer late last year estimated that the online video provider generated around $5.6 billion in gross ad revenues in 2013, with around $1.96 billion of that remaining in its coffers after payments to ad partners and content creators.

1 Billion Monthly Visitors

“YouTube right now is ad-supported, which is great, because it has enabled us to scale to a billion users,” Wojcicki said during an on-stage interview Monday at the Code/Mobile conference in Half Moon Bay, California. “But there are going to be cases where people are going to say, ‘I don’t want to see the ads,’ or ‘I want to have a different experience.’ “

According to Re/code’s report on the event, Wojcicki said YouTube was exploring a revenue model similar to that used for many apps, where users can either “choose ads, or pay a fee.”

Under YouTube’s current ad-supported model, more than 1 billion unique visitors come to the site every month to view more than 6 billion hours’ worth of online videos. The company says its number of daily subscribers to ad-supported content has more than tripled since 2013.

Fast Growth in Mobile, Time Spent Viewing

Wojcicki, who became CEO of YouTube in February of this year, said during her appearance at Code/Mobile that around half the company’s viewers now use mobile devices to watch its content. She added that the amount of time that visitors spend at the site is growing by 50 percent a year.

Under YouTube’s partner program, established in 2007, more than 1 million content creators now earn money through the company’s ad-based model. Thousands of those make “six figures a year,” according to company statistics.

YouTube offers a variety of formats for advertisers. In addition to the TrueView in-stream ads that play before, during or after the main video, other formats include banner ads, transparent overlay ads that appear at the bottom of videos, in-display ads and non-skippable in-stream video ads. This last kind leaves viewers no choice but to watch if they want to see the other content they’ve come to the site for.

Prior to taking over YouTube, Wojcicki was senior vice president of advertising and commerce for Google and helped to develop the AdSense program, which today generates more than one-fifth of Google’s revenues.

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