You are a PM at YouTube. YouTube raised the price of YouTube Premium by 10%. After the change, 10% of its users unsubscribed. What would you do?

Introduction

The recent 10% price increase for YouTube Premium resulted in a 10% user unsubscription rate. This scenario presents a critical trade-off between revenue growth and user retention. I'll analyze the situation, propose experiments, and recommend a strategic approach to address this challenge.

Step 1

Clarifying Questions (3 minutes)

1. What was the rationale behind the price increase?

   • Why it matters: Understanding the strategic goals helps align our solution.
   • Hypothetical answer: To increase revenue and invest in premium content.
   • Impact: Influences whether we should consider alternative revenue strategies.

2. How does the 10% unsubscription rate compare to historical churn?

   • Why it matters: Contextualizes the severity of the user loss.
   • Hypothetical answer: It's 3x higher than our typical monthly churn.
   • Impact: Determines the urgency of our response and potential for recovery.

3. Which user segments were most affected by the unsubscriptions?

   • Why it matters: Identifies vulnerable user groups and potential targeted solutions.
   • Hypothetical answer: Primarily affected price-sensitive users and those in emerging markets.
   • Impact: Guides segmented retention strategies and pricing models.

4. What's the current split between ad-supported and Premium users?

   • Why it matters: Helps assess the overall impact on YouTube's revenue model.
   • Hypothetical answer: 80% ad-supported, 20% Premium users.
   • Impact: Influences whether to focus on Premium retention or ad-supported growth.

5. Are there any upcoming feature releases or content deals that could affect Premium value?

   • Why it matters: Identifies potential levers to increase perceived value.
   • Hypothetical answer: New exclusive content partnerships launching in Q3.
   • Impact: Could inform timing of retention efforts or value proposition adjustments.