SAN FRANCISCO: YouTube plans to offer an ad-free, subscription-based service for the first time in a move that would allow users to skip ads and is likely to ramp up competition with streaming services, such as Netflix and Hulu.

In an email sent to video creators, the company explained that it is "taking another big step" in favour of choice and will be offering users an ad-free version of YouTube for a monthly fee.

By launching a new paid offering, YouTube said that would require video creators to agree to updated contract terms on its Creator Studio Dashboard, TechCrunch reported.

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Video creators, who currently receive a share of advertising revenues, will be offered a percentage of the total net revenues generated by subscription fees.

Although the email did not spell out exactly how much that would be, it is thought creators will be paid 55% of net revenues according to YouTube's updated Partner Program Terms.

"By creating a new paid offering, we'll generate a new source of revenue that will supplement your fast growing advertising revenue," the email said.

Video creators were also not told when the new subscription service will be offered to the public, but the Creator Studio Dashboard notes that the changes will go into effect on June 15, 2015.

While that date may just reflect when the Terms change, an unnamed source told Bloomberg that the service may launch by the end of this year.

"While we can't comment on ongoing discussions, giving fans more choice to enjoy the content they love and creators more opportunity to earn revenue are always amongst our top priorities," Google said in a statement.

YouTube has been facing increasing competition from Facebook and this latest development coincides with a report that more advertisers now intend to use Facebook as a channel for brands to run video advertising and content.

Data sourced from TechCrunch, Bloomberg; additional content by Warc staff