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Comment by Veserv | Hacker News Reader

No, it perfectly showcases that people do not want to pay 1000% more money for the privilege of paying a monthly subscription.

Youtube Premium costs $12/month [1]. Ads average something like $2 per 1000 views to the creators (in some of the most common categories) [2]. Youtube takes a ~45% cut, so Youtube makes ~$4 per 1000 views from ads. So, to reach $12/month, you would need to average 3000 views per month. At a average of 30 days per month, you would need to consume on average 100(!) videos a day for Youtube to come out behind.

Wikipedia says Youtube made ~$28.8B in 2021 and had ~2.5B MAU as of the beginning of 2022. So, the average MAU only brings in ~$10/year. You need to average over 10x the number of views as the average MAU for Youtube Premium to come out behind for Youtube.

The actual alternative is that you charge a comparable price to the advertising revenue instead of complaining that it does not work because your consumers are not dumb enough to pay a 1000% markup.

[1] https://www.youtube.com/premium

[2] https://www.youtube.com/watch?v=Yzb54Upcink

[3] https://en.wikipedia.org/wiki/YouTube

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I don't think you're taking everything into consideration here.

For one it's not only creators who make money. You also have to pay for hosting/development as well as Google's own profit. So the cost to buy ads is clearly greater than $2 per 1000.

I just looked and apparently the cost to buy 1000 views is about $20. So your off by 1000% yourself.

At that rate premium is priced equivalent to 600 views a month or 20 a day. Which doesn't sound absurd to me for someone who uses it as their main source of screen time.

Remember ad views /= video views. There may be 4 ads per video which mean we're talking about watching 5 videos per day.

How many ads would you see in a day watching cable?

If you only use it a few times a week to look up the odd tutorial or something then it's probably not worth it.

For anyone who watches hours everyday it seems a no brainer. I reckon the only reason people aren't buying is because of habit. They're used to ads so a subscription seems outrageous. With Netflix they're used to a subscription so an ad seems outrageous.

Or maybe the people being outraged are different people, I dunno.

I already accounted for all of those factors. The $2 per 1000 views was the estimated revenue from a video with 10 million views. That presumably accounts for the number of ads delivered over the average watch time of the video. The creator averages $2 per 1000 views which is their 55% cut of the ad revenue [1]. That averages out to around $4 per 1000 views in ad revenue paid to Youtube of which Youtube keeps 45% which is ~$2 and the creator keeps 55% which is also ~$2. Unless the "net revenue" they are mentioning is not actually the gross ad revenue from the ads, this logic is sound.

I have no idea where you are getting the $20 per 1000 views number from as no source is given. I have no private information on the topic as I do not run ads on Youtube or run a Youtube channel, but that does not seem to conform to any of the publicly disclosed information from Youtubers that I have ever seen in common entertainment categories. As seen in the video I showed, a channel targeting Finance does average ~$20 per 1000 views, but those are relatively narrow demographics and nowhere near the most common content. Do you have a advertising account on Youtube and the $20 is the number you are being quoted for a ad campaign? If so, is it targeting a high value, competitive demographic? Otherwise, what is the source of the $20 per 1000 views number?

[1] https://support.google.com/youtube/answer/72902?hl=en#zippy=...

I think you two are comparing different numbers.

You are discussing how much money content creators get paid for impressions.

The other person is discussing how much advertisers spend to for impressions.

In the middle is Google, which has it's own costs. If you are going to pay Google to not show you ads it makes more sense to base that off of the amount of revenue it would have generated from advertisers instead of the amount of revenue it pays to content creators on your behalf.

Again, Youtube splits ad revenue 55% to the creator and keeps 45% for themselves. The $4 per 1000 views number I am stating is the money advertisers are paying Youtube unless the term “net revenue” they are using in their revenue sharing FAQ does not mean the the incoming revenue from the ads. I am fairly certain that if they were deducting their cost of delivery from that number then net revenue would not be a correct term and they would need to disclose it as gross profit or some other non-revenue term. As a result, I believe my statement that Youtube is getting ~$4 per 1000 views from advertisers is a accurate representation of the information I have presented.

You've skipped paying additional rightsholders - subscription music rights are substantively more expensive than advertising funded ones. You've no processing fees.

In the US the avg cost of 1000 views to the advertiser is probably $15+. (I’ve spent millions(?) on YT ads)

You can’t average global numbers like that when the average in Indonesia is possibly sub a dollar.

So the premium YouTube subscription might just cost around double what is “fair”

Except those who are most likely to buy it are likely power users who watch twice as many videos.

Which would make the price perfectly fair.

So I’m not sure there’s really a problem here.

That is a good point. It is probably not fair to average globally.

Looking for some US only numbers [1]. It seems reasonable to estimate the US as having ~200M MAU. The revenue numbers reported there are ~$11B, ~$15B, ~$20B globally of which ~$2.5B, ~$3.5B, ~$4B were US only. So, the US was ~25% going down to ~20% globally.

If we extrapolate that forward at 20% (which likely overestimates the US share which was decreasing over the reported period) then the ~$28B in the current year would have ~$6B in US revenue over 200M users which is around $30 per year. This is 3x the number I originally calculated of $10 per year. This still results in 400% revenue for Youtube Premium over the average ad-supported user.

[1] https://spendmenot.com/blog/youtube-revenue-statistics/

What kind of person clicks on YouTube ads and what did you sell them?

That’s not how advertising work. Most of the time, the goal is to create/increase brand awareness, then when you have to buy something you will consider these brands, possibly in a more favorable way.

If I'm aware a brand is wasting money to make me waste my time, money that furthermore will affect their product prices, you can be sure I'm never buying anything from this brand unless there is no alternatives (in which case they don't need awareness)

The best examples are the subscriptions advertised on podcasts, which are invariably venture backed and remarkably shitty. How are the hosts so excited to get their memtal health records leaked!? (€£¥$)

That’s not how the average Joe’s brain is wired

https://en.wikipedia.org/wiki/Priming_(psychology)

only ad I ever clicked on was a Swedish guy selling human meat for consumption. "Eat a Swede" a company in the lab grown meat space.... https://www.youtube.com/watch?v=kE-z6DQv5yg

But yes Ads are more about brand awareness than to actually get you to buy stuff.

I would have expected the human meat seller to be German. But just the concept of human meat, even if lab grown, makes me queasy.

lol, just realised about my mistake.Woops.

On the one hand, it seems sensible that, if you want to grow your own human muscles, the best thing to eat would be human muscles. On the other hand, for purposes of maintaining and repairing the muscles you already have, the nutrient profile you want is probably pretty different from that, and likely there are animals whose meat matches that profile more closely.

> it seems sensible that, if you want to grow your own human muscles, the best thing to eat would be human muscles

and plants shouldn't pull nutrients from the ground, they should only eat other plants! incredible how plants are not sensible!

The vast vast majority of people, including most people who think they don’t. Keep in mind a typical CTR for YT would be 0.5-3% so if you clicked 1 in 100 ads out of curiosity, you’re a median clicker. The second half of your question would take a long time to answer, sorry.

Also, if you look at content creators who share their revenue, they actually make more money from Premium subscribers than they do from ads. So if people want to really support content creators, then subscribing to Premium is the best option.

Apart from the excellent points raised by u/12907835202 in a sibling comment, another important consideration is that YT premium consumers are disproportionately rich compared to the entire YT consumer base. So if you are taking averages, you have to multiply them by at least 3x (i.e. 300%) to account for higher CPMs due to higher conversion values expected from such demographics.

This is the trap Musk was trying to walk Twitter in to with pay to remove ads.

Advertisers are paying a lot more to show ads to exactly the people that might pay to remove ads, wealthy people, especially US people.

The break even price for the subscription has to be much higher than the average revenue per user (globally ~1/10th of US revenue per user), and has to be higher than the average revenue for US users because of much higher advertising spend per user on that demographic.

So in order to not see ads, I must outbid companies who want to show me ads against my wishes. And like any protection scheme, being willing to pay makes you a bigger target. This is why adblockers are the only moral choice.

I say the real moral choice is not to consume that content. Using adblockers is akin to stealing, just because you are not willing to pay the price providers want to charge you.

When youtube.com sends me an HTML file full of links to videos, I am stealing nothing by ignoring some of those links and only watching the videos I care about.

I have no moral obligation to waste my time according to Google's preference.

You are freeloading no matter how much sophistry you try to cloak it with. They haven’t yet started enforcing their terms of service as strictly as they could but what you’re doing is no different from someone hopping the fare gate on a subway or bus and claiming it’s okay because the bus was going to run either way.

> You are freeloading no matter how much sophistry you try to cloak it with.

I'm not trying to cloak anything - of course it's freeloading. So what? We're all freeloading, all the time, on all the millions of things millions people have made and given away over the internet. Google didn't make those videos they're sharing, after all - they got that stuff for free!

If Google decides they no longer want to participate in the sharing economy, that's their business.

> what you’re doing is no different from someone hopping the fare gate on a subway or bus

There is no fare gate on this subway. There are no toll collectors; there are no tolls. Everyone rides for free. This transit network is paid for by the vendors running shops inside the stations, who hope to profit from the foot traffic. They can hope all they want that I will make purchases in their stores on my way to and from the train - but maybe I'm just not going to.

> We're all freeloading, all the time, on all the millions of things millions people have made and given away over the internet. Google didn't make those videos they're sharing, after all - they got that stuff for free!

This just isn't true. You're not freeloading if you use the service as designed – ad-supported services became predominant because that was the easiest way to reliably get enough revenue to run a business. Google pays roughly half of the ad revenue to people who make YouTube content, which may or may not be what you consider fair but it's definitely not free.

> > what you’re doing is no different from someone hopping the fare gate on a subway or bus

> There is no fare gate on this subway.

That's the ads – the terms are that you either watch ads or pay directly. When you bypass the ads, you're breaking that arrangement and depriving everyone of the money they would otherwise have earned. Now, you can argue that they get enough anyway but that's exactly the logic that people use to hop a fare-gate trying to claim that all of the other passengers are taking care of the cost. If that's who you want to be, just admit it.

> the terms are that you either watch ads or pay directly. When you bypass the ads, you're breaking that arrangement

Well, that's where we differ: you think there's an arrangement, which obligates you to support Google's profit model, and I simply don't. I never agreed to any terms, and other people's businesses are not my responsibility.

Do you feel obligated to buy a block of cheese after you eat the free sample on the tray at the grocery store?

YouTube has terms of service which you agreed to by continuing to use it. This article is about stricter enforcement of those terms so the only change is that you might soon be unable to pretend otherwise.

The cheese sample analogy breaks down as soon as you think about it. Unlike watching ads on YouTube, the samples are offered without any willing agreement to make a purchase but that doesn’t mean that there aren’t other terms. For example, if you try to show up to the store naked or drunk you’ll be asked to leave because, like YouTube, it’s private property and the business has no obligation to provide service to people who don’t follow their terms. Similarly, you’d be refused entry if you started taking all of the samples or standing around shouting about how bad the cheese is. That store probably has a bathroom, but if you’re not a customer you aren’t allowed to use it.

All of this is conceptually very similar to that YouTube offers videos to people who watch ads (or pay) but the difference is that most people understand that it costs money to make physical things. Digital content has been ad supported for so long that many people think of it as free and are unwilling to even consider other models.

If you an tell me a way to teleport to an alternate reality without YouTube, I will take it. In this reality, 90+% of videos are hosted on YouTube simply due to network effects.

And yes, public transit should ideally be free to the passengers too - fare collection and enforcement is a giant waste of money when the whole thing is already largely funded via grants.

In both cases, yes, there are arguably better models but you get those by working for them, not freeloading.

For example, it’s easy to avoid YouTube but you’re supporting YouTube’s continued dominance by using it – even with an ad blocker, you’re contributing to views and likely engaged social activity which drives more traffic to YouTube, and for that matter there are a surprising number of people here contributing PR to YouTube pro bono by claiming there’s no alternative, which isn’t true but certainly what they want advertisers and creators to think.

Similarly, I also agree that there is a lot of unhealthy history around transit fares but dodging them does not build support for lowering them. You get that by working in the political process first and riding for free after that isn’t actively harmful for the service.

Picture an alternative universe where all transit was ad supported and everyone has to watch an ad before you can get on a bus. That or pay $1000 a month for free no-ad transit anywhere in a city.

Except there are some people with ad-blockers who can get on their bus immediately and always get to their destination earlier because of that, being more productive and mentally healthy throughout their life as a consequence of not watching ads every day of their life. All without paying $1000 a month.

People who dutifully watch ads (let's call them ad-watchers) think the ad-blockers are freeloaders and that they - the ad-watchers - are doing the difficult right thing by watching obtrusive long useless braindead ads every day since it supports the finances of the entire transit system. And that the ad-blockers are essentially stealing and should pay the $1000 a month if they want the ad free version.

The ad-blockers believe they are fighting a system they believe is harmful and want changes and argue they are using ad-blockers in a sort of protest as is their civil right. The ad-blockers point out they would rather have a system where customers can each rapidly pay for transit at a reasonably low fare and that $1000 a month is outrageous. Moreover that the advetisement saturation to support the transit system is likewise harmful, useless and inefficient and that there is a better way that will make everyone happy. They further argue that due to monopolies and network effects ad-blocking is the only option for anyone to easily protest as there are no private transit companies that have been able to gain the capital and infrastructure necessary to compete with the ad-supported transit hegemony.

The ad-watchers scoff and tell the ad-blockers that no matter how much sophistry they try to cloak it with to falsely paint themselves as protestors - what they are doing is no different from stealing and they are just lucky the transit system hasn't started more rigidly enforcing its terms of service.

Not just rich, they likely consume YT significantly higher than normal crowd, thus higher cost for Google to serve them. If someone watches 1 video a day in YT, they likely won't think of getting a subscription.

You can still sell those users' more valuable usage data and they've even coughed up a bunch of personal information to setup payment and have signaled that they have money and are willing to pay for things. So in return for paying they get no ads on this particular platform while getting a target painted on their back.

And if you need more money later you can just convert youtube premium from a no ads platform to a less ads platform. You just have to do it slowly so not to many people bail at once because the pot got to hot to fast

Also there's the fact that once enough people get on board with the ad free subscription services, they usually just start adding ads anyway.

I don’t know why you’re being downvoted, that’s true. I paid my Android TV $2000 and guess what? They added ads on the Home! Google sucks and there’s no way I’ll directly give them money, ever again.

I wasn't even thinking about Google specifically here, it seems like almost every ad free service eventually adds ads.

for eg. Netflix. Although they will try to convince that people will have to pay less.

I think a smart TV home screen showing you things you might consider watching on services you probably already subscribe to is in bounds. A bit like calling menu items at a restaurant advertising.

It's not, because it keeps suggesting stuff from Disney+, which I don't subscribe to. It's advertising.

It's also clearly not inspired from stuff I've watched, but from stuff announcers want me to watch.

This is just smart TV's in general. I have "The Frame" TV from Samsung and was super disappointed when I realized they put non-removable ads on the home page. Mostly from Disney+ which I don't even subscribe to. This is after I went through and spent an hour disabling their built-in autoplay cable-over-internet feature.

Advertisers aren't interested in buying only the eyeballs that are too poor to pay themselves out of the annoyance.

Guess I'm dumb, because I've been subscribed to YouTube premium for quite a while now. I watch it on many devices that don't have any way of installing ad-blockers (like streaming devices to TVs). Not to mention, that an "ad" on YouTube has no time limit. I remember back when I didn't subscribe of seeing an ad for marble countertops that lasted over 45 minutes. Seriously. So if I just put on a bunch of videos to watch that may be like 10 minutes each, in between may be a 45 minute commercial that I have to go and physically hit the skip button. Sometimes I like to fall asleep listening to soothing videos, only to be hit with a fricken 45 minute commercial that's LOUD in between.

Sure, guess I'm dumb. But I don't care. Subscribing gets me what I need.

You also get YouTube Music, which is not as great as Spotify, but nonetheless worth something.

In fact, that’s the primary reason everyone I know who has YouTube Premium subscribes: music steaming + ad-free YouTube.

That needs to be factored into your calculation, no?

No, a bundled second thing that I won't use is worth $0 and so does not have to be factored in.

It's even worse, as they actively degrade the features you use.

With movies and music in the mix, international licensing agreements needs to be respected.

In short, I paid for YouTube premium to avoid ads. Then I travelled to another country where YouTube didn't have licensing rights for all of their movies and music, so my premium account was just disabled completely and I got ads again.

You can fix that with a VPN service, or by creating your own VPN network. You could buy a Digital Ocean droplet in your location and connect to that like a VPN.

https://www.digitalocean.com/solutions/vpn

1 - this is not a solution, it's a workaround. an adblocker solves the issue much better

2 - DO vpns are blocked (almost) everywhere

Are you asking people to pay additional money to a third party service so that they can continue to use a service they have already paid for and should be fixed by that service provider in the first place? Don't you think this is ridiculous?

Genuinely curious: if you bought YT premium mainly to block ads, why not just use Ublock Origin along with something like NextDNS?

I don't need youtube music and am lucky enough to have youtube premium lite available at 6€. That just eliminates ads for half the price.

being forced to pay for YouTube music is one of the reasons I ended my YouTube premium subscription years a while back

Great, then it shouldn't be a problem to offer a cheaper price for people who only want YouTube, right?

After you pay for the music rights for a subscription video service the cost base is identical. As you could use YouTube as a music streaming replacement service (and literally millions of people do) then the labels charge for the same license.

At least in Sweden they are offering Youtube Premium lite which is just ad-free Youtube (no Youtube Music)for about $6/month.

That’s about the level I would pay for the service, a major bummer that lite isn’t available in the US.

No, if they introduced this tomorrow you still wouldn't pay. Don't kid yourself.

> That needs to be factored into your calculation, no?

Only if I get to pay for a lifetime of access with a hand-drawn picture of a seven-legged spider.

I remember that being hilarious. Do you have a link to it?

https://knowyourmeme.com/memes/events/paying-bills-with-spid...

and

https://youtu.be/2IivXENMiI8

YouTube premium also includes a music service with near peer features to Spotify/Apple music. On its own that’s worth $5-$10 a month. There’s also other features like offline downloads and background audio for podcasts.

Ad removal is just one feature amongst many with YouTube premium. So it’s not fair to compare the subscription price entirely against the CPM of the adverts you don’t have to watch.

But what’s my time worth, not sitting through ads each month? If I make $12/hr, and I have to watch 120 30sec ads in a month of watching YouTube, I’ve broken even.

I think most of us make a bit more than 12/hr… so it quickly becomes worth it.

Obviously, that is why I specifically framed it in terms of Youtube's revenue generation. Youtube provides a ad-supported option and a paid option, except they charge 10x the rate for the paid option. Yet for some reason, the argument is always that nobody likes paid options or "microtransaction" models when the obvious problem with almost every scheme that companies try is that they always try to markup by like 1000% at a minimum.

Only if the time you save not watching ad, you actually work. What if you would just watch more videos in the same time or go to 9gag?

What if I am watching more videos that teach me something that ultimately make me earn more?

ADS is money I'm leaving on the table.

IMO That's the wrong question. The question is rather is the premium 'enough' to make it worth it to buy it or just stay with ad blocking as we did years before that option.

It's not only about the markup imo. I share netflix and all with my girlfriend in the same household. But for YouTube we both need our own premium because of the weird limits. More than that I would likely need 2 for me alone because of the limits. Even more because I organized my abos in different accounts.

I would buy one, but I won't buy 3. And I won't buy even 1 when I still have ads every so often.

What weird limits ? What ads ? I'm sharing the yt premium with my whole family with no issues, and the only ads I see are the sponsoring from content creator directly in the video, but nothing from google

Only one device being able to hear music at once? Only 2 or so being able to watch movies at once? YouTube app and browser on the same device already being 2 devices. And yes with ads I mean sponsored ad blocks from the creators. Before I had these blocked I unsubbed more people than I subbed because of minute long VPN ads

Not to derail you but Premium costs $16/month when I view the option from the YouTube app on my phone. Not sure why this is the case.

EDIT: Never mind it’s just the apple tax. I had forgotten about it.

Youtube premium also includes other features, such as ability to download videos to view offline (e.g. flights).

But I also feel like you have an incorrect unstated assumption: People are not perfectly rational. The difference between paying $0 and paying $1 is ENORMOUSLY bigger than the difference between paying $1 and $12.

C.f. people will spend hours finding the perfect app that is also free, instead of just paying $2 for the perfect app they found after 2min. It doesn't make any sense.

Pirating YouTube videos with a third-party downloader also gives me the ability to download them for offline use, and see no ads.

I don't judge you, but when I actually can pay for a product that is as good as (or better) than pirated, then I don't mind paying.

For youtube I can. So I do. It's just a shame that so many industries give you a worse product than what you can pirate for free. I actually am willing to pay.

If I could pay the creators for what they make on YouTube, I would do so relatively cheerfully.

I have zero interest in giving money to a company that is actively trying to undermine everyone's privacy and security in the service of its own profit.

I guess that's what patreon is for.

When looking at these numbers you have to remember that they are global numbers. Ads in rich countries like the US will make them way more money per user than the ads in poor countries. And YouTube Premium is also far cheaper in poor countries - it's like $2/mo in India, which probably pretty accurately reflects how much an average user draws in in each country.

Can you put those numbers in terms of exec salaries?

Like, Google Cloud's 2023Q1 profits being ~85% of Sundar's 2022 earnings [0].

[0]: https://www.cnbc.com/2023/05/03/google-employees-complain-ab...

This could easily be fixed by paying the creators a much larger per view fee whenever a premium user watched their content. 1cent per view is 10$/cpm, that is 3-6 times more than what ads pay and would strongly incentivise creators to encourage subscribers go premium and create premium-only content for them. Now you can't do that because premium is a ghost-town and you lose ad revenue, but if, say 25% of users are premium then it starts to make financial sense.

Your suggestion to cut the price is unlikely to strongly increase premium subscriptions, YouTube has probably already set it to a revenue maximizing value.

$12/mo is a ridiculously low amount compared to what value YouTube brings.

You're assuming YouTube is not loosing money with non-paying customers...

Giving them my card data feels more expensive than $12/month. The model of paying to remove ads always felt like hostage taking.

"Is this ad annoying enough for you? No? You think you're a tough guy? Here's an advert of me slicing off your toes. Now tell me your home address so I can mail them to you. Read me the CVV2 numbers from the back of the card to make it stop!"

You can choose to pay for convenient download functionality and background playback on mobile, and think of the ads as a bonus, if you prefer.

Let me guess: the download functionality doesn't actually give me access to the DRM-free video file and when YT deletes a video it's useless to me.

Sure. I wouldn't recommend it for archival. I would recommend it for downloading a few videos before a trip when you expect flaky/slow internet. Much more convenient than the youtube-dl dance I did before. Ymmv.

Of course it doesn't. It's just allowing Google to have a local cache.

I'm a premium subscriber but the background playback thing is a pretty insulting idea to me. They can save like 95% of the bandwidth if I'm listening to something audio-only. So why make it part of the more expensive option?

It's probably a licensing thing due to the large amount of music on Youtube.

Nah, come on. It's just a popular feature that they locked behind the paywall, so that more people subscribe.

Don't get me wrong, I really like my Premium. But this decision is a business one, not a technical one, and I was charitable.

Even if it's a business decision, so what? It makes perfect sense, Youtube cant charge advertisers for video ads played when the app is in the background.

Nah, come on. The price is well worth it just for the hosting and internet traffic costs.

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