As a regular viewer of Youtube, you might have come across the option to subscribe to Youtube Premium. Despite the benefits of ad-free videos, offline viewing, and special content, some users may find the subscription cost a bit high. In this blog post, we will discuss the 9 factors that contribute to the relatively high price of Youtube Premium.
Why Is Youtube Premium So Expensive
Here’s the complete table of the 9 reasons, causes, or factors behind the high cost of Youtube Premium:
| Reasons | Short Description |
|---|---|
| Premium Content and Features | Youtube invests heavily in producing exclusive shows, movies, and documentaries for its premium subscribers. These premium shows are not available for free on the platform and require significant investment from Youtube. |
| Ad Revenue Dependence | Youtube heavily relies on ad revenue to keep its platform running, but the ad revenue generated per user has decreased, leading to a need to supplement this revenue by charging users for access to premium features. |
| High Licensing Costs | Youtube has to pay hefty fees to content creators and studios for the rights to exclusive shows and movies. These costs can quickly add up, making it more expensive for Youtube to produce premium content. |
| Creator Payments | Youtube pays its creators a significant amount of money for their content. With the rise of premium features, Youtube has had to increase the amount paid to creators to keep them interested in producing content for the platform. These increased payments ultimately result in higher costs for users. |
| Music Streaming Rights | In order to legally stream music on the platform, Youtube has to pay licensing fees to record labels and artists, which can be costly for the platform. These fees contribute to the overall cost of Youtube Premium. |
| Storage and Bandwidth Costs | Youtube generates an enormous amount of data and has to invest in expensive storage and bandwidth technology to store and transmit this data. These costs are passed on to users in the form of higher subscription fees. |
| Competition from Other Streaming Services | Youtube has had to compete with other streaming services like Netflix and Hulu by producing higher quality premium content, which has led to higher costs for producing premium content that is ultimately passed on to users. |
| Geographic Differences in Pricing | The cost of Youtube Premium can vary depending on where you live. In some countries, the cost of the service is significantly higher due to higher licensing costs and the cost of living. This factor makes it difficult for Youtube to offer a consistent pricing model across all regions. |
| Platform Investment and Development | Youtube has to invest in cutting-edge technology to keep up with the demands of its users. These investments ultimately result in higher costs for users. |
Premium Content and Features
Youtube Premium is a subscription-based service offered by Youtube, it provides users with various benefits such as ad-free viewing, offline downloads, background playback and more. However, one of the main reasons that the service costs more than the standard version of Youtube is the access to premium content and features.
Youtube Premium subscribers get exclusive access to high-quality shows, movies, and documentaries produced by the platform. These shows are not readily accessible on the free version of the platform and require significant investment and production costs.
In this manner, Youtube is similar to other streaming services such as Netflix and Amazon Prime which also offer exclusive, premium content to their subscribers. For example, Youtube Premium has shows like “Cobra Kai,” a sequel to the renowned film “Karate Kid,” which isn’t available on normal Youtube.
Ad Revenue Dependence
Youtube is a free platform that generates revenue primarily through advertising. Ads on Youtube generate revenue for the platform by being shown before, during, or after a video. Thus, the more ad views and clicks that YouTube gets, the more revenue it generates.
However, over the years, ad-blockers have become more popular and have decreased the effectiveness of ads on YouTube, leading to a drop in revenue generated per user. Additionally, mobile devices are becoming more popular, further impacting the platform’s revenue since mobile devices have smaller screens and smaller real estate for ads.
To supplement this drop in revenue, Youtube offers its users access to premium features through Youtube Premium. This service offers ad-free playback, offline downloads, and features like background playback, which provides an enhanced viewing experience for its users.
High Licensing Costs
In order to provide premium content to its subscribers, Youtube needs to acquire the rights to exclusive shows, movies, and documentaries from content creators and studios. These licensing deals can come with high costs and fees, which can add up quickly, making it more expensive for YouTube to produce its premium content.
The licensing costs are higher for premium content since these shows/movies are exclusive to the platform and aren’t generated through the regular ad-revenue. For example, Cobra Kai, a famous show on Youtube Premium, was bought by Youtube from the previous distributor only after genuine bidding and paying a handsome sum. Along with licensing costs, Youtube has to bear production costs that help improve the quality of the premium content.
As competition among streaming platforms is intense, premium content is used to attract and retain viewers. In this way, top-quality shows and movies are essential for platforms like Youtube to provide to their subscribers. However, these licensing costs come at a premium that translates into higher subscription fees, which is why Youtube Premium costs more than the standard version of Youtube.
Creator Payments
One of Youtube’s main strengths is its robust creator community, and the platform’s success is closely tied to the creators who produce their content on the platform. Creators who have a sizable following on Youtube and produce quality content can earn a significant amount of money through advertising revenue alone.
With the introduction of premium features for users, Youtube has begun to pay creators an even greater amount of money to entice them to produce exclusive, premium content for the platform. Indeed, these premium features have caused a spike in production costs.
Creators benefit from premium features, like ad-free playback, since their revenue will not suffer from users watching fewer ads. Additionally, creators can earn an extra income from Youtube Premium users, who provide more revenue to the platform. Youtube has incentivized the creators to produce content for the platform that can only be seen on Youtube Premium through licensing fees and exclusive productions.
Music Streaming Rights
Music streaming is a crucial part of Youtube, with millions of people streaming songs and listening to music videos on the platform daily. Music is an important aspect of Youtube, and as a result, Youtube pays licensing fees to record labels and artists for legal use of songs.
These licensing fees can be expensive, especially for the exclusive songs and albums that are produced for the platform. Music is a unique form of content, and the licensing fees required for its use are generally more significant than those for other forms of media.
Youtube Premium also offers music streaming services, which require the platform to pay licensing fees to artists each time a track is played or downloaded. This means that the more users start using Youtube Premium for music streaming, the higher the licensing costs will be, as the platform has to compensate the artists at a higher rate compared to ad-revenue for normal videos.
Storage and Bandwidth Costs
As one of the world’s most popular social media platforms, Youtube generates a vast amount of data. This data includes videos, music, metadata, and other information shared and stored on the platform. As a result, Youtube has to invest in expensive storage and bandwidth technology to manage and deliver this massive amount of data to its users.
Youtube’s storage costs are massive, with the company having to store hundreds of hours of video footage uploaded by creators every minute. Additionally, the platform requires vast amounts of bandwidth to stream these videos to millions of users worldwide, which requires heavy investment in server infrastructure.
These storage and bandwidth costs are significant contributors to the cost of Youtube Premium. These fees are passed down to users because the platform requires revenue to function optimally. The costs invested in storage and bandwidth are to ensure that the platform is delivering streaming services efficiently and smoothly to its users.
Competition from Other Streaming Services
As a streaming video platform, Youtube faces significant competition from other streaming services like Netflix, Hulu, and Amazon Prime Video. To compete, Youtube has had to invest heavily in premium content and features to keep its users engaged and subscribed. As a result, producing premium content has become increasingly expensive, driving up the costs to provide these types of services.
The competition for exclusive content has caused a spike in prices as each streaming platform seeks to acquire the best shows and exclusive documentaries for their users. This means that YouTube has to bid on content against multiple platforms, which drives up the licensing fees costs to acquire the exclusive shows/movies.
Geographic Differences in Pricing
Geographic differences in pricing are a common occurrence due to cost differences in different countries. Though the cost of Youtube Premium is generally marketed mostly in USD, the price of the service may differ depending on the local currency.
The cost of Youtube Premium varies based on the location due to differences in licensing fees and the cost of living. These factors have a direct effect on what consumers are willing to pay for the service, as well as the platform’s overall cost of providing the service in that region.
Platform Investment and Development
As one of the world’s most popular websites, Youtube has to invest heavily in the development and maintenance of its platform to keep it running smoothly. The demands on the platform are high with millions of videos uploaded every day, requiring cutting-edge technology to keep up with the user demands, and to monitor copyrighted content making its way onto the site.
Youtube has to continually invest its resources in developing its technology, infrastructure, and security measures to protect its users and maintain the platform’s optimal performance. This investment in development carries a significant cost that is ultimately passed down to users in the form of higher subscription fees for services such as Youtube Premium.
For instance, Youtube has to invest heavily in developing algorithms to monitor copyrighted content and regulate inappropriate content to give viewers a comfortable experience. Youtube continuously tests and develops its algorithm to improve on language dynamics, and regulation while simultaneously introducing advanced digital system operations. These changes usually require hefty investments, which are recovered mainly via premium stream services’ subscription fees.
Conclusion
To conclude, Youtube Premium is an expensive service due to a variety of factors including differences in licensing costs and cost of living in different regions, as well as the significant investment required for the platform’s development and maintenance. These investments are necessary for Youtube to stay competitive and deliver high-quality services to its users.
With the rising demand for online streaming services, it is likely that Youtube Premium will continue to remain an expensive service in order to meet user expectations.
About Dawson Kutch
Dawson Kutch is a born and raised Alaskan who loves the outdoors and everything it has to offer. Kutch has been an avid hunter and fisher his entire life, and takes great pride in providing for himself and his family. While he enjoys spending time in the great outdoors, Kutch also has a passion for fashion and loves to stay up-to-date on the latest trends. In his free time, Kutch enjoys spending time with his wife and one young daughter. He is always looking to learn more and better himself, both as a writer and as a person.
