YouTube launched paid channels, a long rumored expansion to their revenue program, for 54 chosen producers ranging from movies to children’s programs. For as little as 99 cents to as high as 10 dollars a month, you are now able to subscribe to an ad-free channel with full episodes (assuming you have Google Wallet). It seems like a natural continuum for YouTube as prime time media consumption is moving online from TV.
A solid idea, except for a small hiccup. In the US, there’s been discussion about forcing cable companies to let customers pick and choose channels as they wish. So, goodbye for packages and hello à la carte menu items. Google has brought this principle to YouTube without realizing what separates YouTube from TV. While traditional television carries separate channels hosting multiple different shows, YouTube mostly consists of channels with one show, around a single topic. The TV model may work in a TV environment because there is still variety within a channel, but the question is whether YouTube’s iTunes style offering is enough in a Spotify era?
Lets put things in perspective. Would you be willing to pay a subscription fee for every single show you follow for, lets say $5, a month? And I’m talking per show, not channel. The bill quickly adds up when you realize you have to pay a fiver for Anthony Bourdain, another for MythBusters, another for that cooking show with the guy who was supposed to be naked. You end up getting less for the money that you are used to (a month’s Netflix subscription costs 7.99 euros). This is the situation with YouTube.
I’m subscribed to 111 channels, most of them being partner channels. If even four of those turn into paid-to-view, depending on the fee, I would probably have to lose some of them. I don’t see this as a viable revenue plan for single topic channels, however, for channels that have more variety this could work, for example, movie channels, documentary channels and National Geography for Kids on YouTube. Pay-to-view is probably a more viable option for TV broadcasters or big content networks such as Machinima than for single YouTube creators.
So, flop or not? The pay-to-view revenue plan is not for everybody and that’s fine. What determines whether YouTube will become the next Netflix or Hulu is how well Google will market the service. The company is great at creating awesome services but the challenge has been raising awareness or not having a realistic take on existing market conditions when it comes to positioning. Also being able to pay only with Google Wallet might result into a minor road bump.