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Summary:

YouTube started to offer paid subscriptions to select channels this week. But are people actually going to pay for their YouTube videos?

Are you ready to pay for YouTube? Earlier this week, YouTube launched paid subscriptions in cooperation with a few select partners, resulting in a total of 53 subscription channels that can be accessed for as little as $0.99 per month. The move had been rumored for at least two years, and it’s just the beginning of a much more ambitious strategy that will eventually give every qualifying publisher a self-serve option to launch a channel subscription.

There may admittedly not be an easy answer to the above question, given the nature of YouTube’s subscription model. The site isn’t charging users for an all-access package, but isinstead turning individual channels into paid subscriptions. Some of them will likely fail, while others may well succeed. But you can learn some lessons from YouTube’s past to get a sense of how this paid future will play out.

To succeed on YouTube, you need to understand YouTube

It’s especially worth looking at YouTube’s other ambitious monetization plan — the site’s premium channels, which received sizeable advances from Google to produce higher-quality content in late 2011. YouTube’s initial lineup included a lot of A-list celebrities and big-name media brands. Madonna, Tony Hawk, Ashton Kutcher, Reuters and Lionsgate all were part of the initial lineup. They were joined by genuine YouTube-born celebrities like Phil DeFranco and Cenk Uygur, who launched new channels with additional content as part of the content push.

Guess who succeeded? Here’s a hint: DeFranco’s SourceFed channel clocked more than 345 million views to date. Reuters TV, on the other hand, only got 11 million views. Many of the outside media brands simply didn’t know how to talk to YouTube’s audience, and as a result failed to get enough traction on the platform. That’s why quite a few of them didn’t make the cut to get additional funding when YouTube renewed its commitment in November. Only 30 to 40 percent of the original channel lineup was part of a second round.

That’s a lesson that may be true for paid subscriptions on YouTube as well. Brands and personalities who already have a dedicated fan base on the platform will have little trouble asking them for $2 or $3 a month, provided that they come up with an interesting value proposition. Outside brands that want to use YouTube as an additional platform to sell their content may have a much harder time — which is why it was so surprising that the first slate of subscription channels largely consists of outsiders.

Sure, there’s a market for some of them. But in many cases, that market may not be on YouTube. A sales pitch like “discovering movies you’ve never heard of is part of the fun,” as used by the $5-a-month channel BigStar Movies, may just not fly with YouTube users when the site also hosts tons of movies we’ve never heard of for free.

People do pay for niche content, if it’s done right

The contrarian argument to this is that there is a proven market for niche content, and there’s no reason that this couldn’t extend to YouTube. In fact, the site already has a subscription success story: Long before YouTube announced its subscription plans, it started offering a subscription package for Indian cricket games in cooperation with Willow.tv.

It’s part of Willow’s online subscription service, which is available on a variety of platforms, with Google doing the billing for users subscribing on YouTube. And Willow.tv seems to be doing really well, because it delivers content unavailable elsewhere.

Other niche players have shown that people are willing to open their wallets as well: Two months ago, Crunchyroll announced that it now has 200,000 paying subscribers for its Anime-focused video service. There’s no reason this kind of content wouldn’t work on YouTube as well.

And people may not just want to pay because of scarcity: Sesame Street videos are widely available online, including on PBS Kids, Sesamestreet.org, YouTube, Netflix and Hulu. But especially on YouTube, it’s often just one click from a cute Elmo video to one of someone setting an Elmo doll on fire. Giving parents an option to access full-length-episodes, and keeping kids glued to the official Sesame Workshop channel, may get quite a few of them to pay a few bucks a month.

It’s not whether YouTube succeeds, but who about who succeeds on YouTube

In a way, if YouTube can succeed with its subscriptions seems almost to be the wrong question to ask. It’s more about who can succeed with subscriptions on YouTube – and I suspect that we are going to see many failures and quite a few success stories.

And if you ask me, my money is on Cenk and Elmo.

Image courtesy of Flickr user  sushi♥ina.

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  1. Great Article. I was looking into this because I’m not on twitter and I haven’t heard allot of talk about this from the content I watch. Maybe the Vlog Brothers talked about it, I’m really behind on some videos of theirs.

    But yeah, I really do think this could work at $0.99 for some channels. YouTube’s more vocal core market might not like it at first, but they’ll accept it eventually. Let’s just hope they don’t make a whole section for it in the youtube channel design! YouTube members would automatically tag the move as Infamous.

  2. Janko – How do you define success for these content providers?

    1. Janko Roettgers RJ Sunday, May 12, 2013

      That’s actually a really good question. Anyone who produces exclusive content for a subscription channel would obviously want to make a profit. Providers that just pursue this as one more licensing opportunity (which is the case with most of the ones that are part of the first round) may have lower expectations. I guess in the end, it again comes down to the individual channel to define their own targets.

  3. Borris bazelais Tuesday, May 14, 2013

    99 cents might be worth while to subscribe to a niche channel but some of the channels charge as much as $12 a month for mediocre content on YouTube, why pay for mediocrity when its already free.

    Its all about good old original content and so far Im not sold on the YouTube subscription model, for one most of their channels and shows are copy cats of some of the existing cable networks. The $7 dollars I pay for Netflix brings a lot more value then paying for a channel on YouTube or even a destination such as Bigstar.

    Start Ups getting into the game need to be financially creative in producing channels and shows to make business sense, target market is key followed with great original productions. One just needs to find that secret sauce and you have to git in where your niche audience fits in.

  4. I think this is dumb.I mean seriously?who will pay for youtube?if YouTube do this they will go down in flames

  5. i could understand if it was $0.99 to use youtube as a hole but i am subscribed to over 40 channels and paying $40 a month is just insane

  6. I wouldn’t know what to do with myself if they go through with it. I mean I’m addicted to YouTube, but I don’t want to pay for it. Besides…I don’t have a paycheck.

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