Alphabet looks set to roll out a cheaper YouTube subscription to better battle its rivals in the increasingly popular podcast market. YouTube is planning to introduce a lower-priced version of its paid video service called “premium lite,” according to a Thursday Bloomberg report . This new tier will offer an ad-free experience for YouTube’s vast library of podcasts and how-to clips but will continue to show ads on music videos. Alphabet shares ticked 2% lower Friday in a broader market slowdown. A spokesperson for YouTube confirmed the company has been testing “a new YouTube Premium offering with most videos ad-free in several of our markets. We’re hoping to expand this offering to even more users in the future with our partners’ support.” YouTube Premium is currently priced at $13.99 per month. While pricing for a “lite” tier hasn’t been disclosed, it would be cheaper, according to a source familiar with the situation told CNBC. The lower-tiered option aligns with two ongoing trends for YouTube: podcasts and subscriptions. YouTube has both benefited and enabled the rise in video podcast consumption, last year becoming the most popular platform for podcast listening in the U.S., Edison Research found in October . But it’s also facing more competition. Spotify , the second most popular podcast platform, per Edison, is leaning further into video given the rapid expansion in video consumption hours among its podcast users. The company announced a few new video offerings and features in November, including allowing its premium members to watch podcasts without interruption from dynamic ads. Of Spotify’s 640 million users, there have been more than 250 million who have watched a video podcast on the platform, the company noted in a press release. It also cited that nearly two-thirds of listeners prefer podcasts over video. That’s likely why there’s been a 50% year-over-year growth in Spotify podcast creators publishing monthly videos. Subscriptions are a growing focus for Alphabet as well. YouTube, which turns 20 this year, has 100 million subscribers across YouTube’s Premium and Music Services. In a February blogpost , YouTube itself noted viewers are watching on average over one billion hours of YouTube content on TVs daily, and TV is now a primary device for YouTube viewing in the U.S. This new, interactive form of television, which includes podcasts, YouTube Shorts and livestreams, are key drivers to this high viewership, the blogpost said. This is made possible given the enhanced AI-powered content creation tools that YouTube has invested in to make it easier for creators to publish content. The growth in YouTube’s subscription services are a huge source of strength in recent quarters and continue to see lots of momentum. “We continue to have significant growth in our subscription products, primarily due to increase in the number of paid subscribers across YouTube TV, YouTube Music Premium and Google One,” Alphabet CFO Anat Ashkenazi said during Alphabet’s fourth-quarter earnings webcast. The emphasis on YouTube subscriptions is a key part of the Alphabet story as it diversifies the company away from advertising, which can be cyclical at times. It also reduces the reliance on Google Search advertising revenues, which have come under scrutiny due to perceived competitive threats from chatbots like OpenAI’s ChatGPT. Introducing a lower-priced tier also is a good way to retain customers, and possibly expand its base to those who weren’t willing to pay up for the full version of YouTube Premium. However, Jim Cramer is on the fence about Alphabet given it didn’t report that great of a quarter . But while Jim questions the stock right now, he doesn’t mind owning it because the company has “so many levers that could easily explode,” that we could end up regretting exiting the stock. YouTube is one of those attractive parts of the business that has more potential for growth. (Jim Cramer’s Charitable Trust is long GOOGL. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
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Alphabet looks set to roll out a cheaper YouTube subscription to better battle its rivals in the increasingly popular podcast market.