Google's YouTube Lets Content Creators Charge Fees to Viewers

 
 
By Todd R. Weiss  |  Posted 2013-05-10
 
 
 
YouTube Fees

Google's YouTube Lets Content Creators Charge Fees to Viewers


Google's YouTube online video service will now start charging viewing fees for some content under a program that aims to reward video creators for their labors while encouraging the development of better video for the huge online audience.

"Starting today, we're launching a pilot program for a small group of partners that will offer paid channels on YouTube with subscription fees starting at 99 cents per month," the YouTube team announced in a May 9 post on The Official YouTube Blog. "Every channel has a 14-day free trial, and many offer discounted yearly rates."

Some of the paid content at the start of the pilot includes "Sesame Street," which will offer full episodes on their paid channel when it launches, as well as "Ultimate Fighting Championship" (UFC), which will offer classic fights such as a full version of their first event from UFC’s new channel, according to the post.

So far, there are 53 paid channels listed in YouTube's pilot program, including Acorn TV, Baby First PLUS, Cars.TV, Comedy.TC, Cuba.TV, Docu Pix, Fix My Hog, Justice Central.TV, Laugh Factory VIP, Pets.TV, SmartTV.com, SportskoolPlus, Treehouse Direct and Woodworkers Guild of America Premium Channel.

"Once you subscribe from a computer, you’ll be able to watch paid channels on your computer, phone, tablet and TV, and soon you'll be able to subscribe to them from more devices," the post said.

The idea behind the program is to help find new ways for content creators to gain more revenue from their work, according to YouTube. "We've been building a YouTube partner program since 2007 that enables content creators to earn revenue for their creativity. We've watched them build amazing channels that have made YouTube into a news, education and entertainment destination 1 billion people around the world cannot do without."

Requests for more revenue-generation models on YouTube are "one of the most frequent requests we hear from these creators," according to the post. "We've been working on that and wanted to fill you in on what to expect."

More such efforts will be coming in the future, according to YouTube. "This is just the beginning. We'll be rolling paid channels out more broadly in the coming weeks as a self-service feature for qualifying partners. And as new channels appear, we'll be making sure you can discover them, just as we've been helping you find and subscribe to all the channels you love across YouTube."

By giving video content creators more ways to bring in revenue, the program hopes to encourage them to create even more great content for YouTube's global audience, according to the post. "Just as the partner program empowered creators to take their channels to the next level, we look forward to seeing how this great community of creators moves ahead with a new way to reach the fan communities that made their channels a hit."

Rumors of a pending subscription service on YouTube surfaced earlier this month.

Several IT analysts told eWEEK that the move makes sense for the creators of content, many of whom only receive small amounts of revenue for their work through online ads.

Google's YouTube Lets Content Creators Charge Fees to Viewers


"I think it's a great thing because it creates a marketplace where one doesn't exist today," said Daniel Maycock, national leader, technology strategy, at Slalom Consulting. "The way most people make money on YouTube today is through advertising. There's no incentive to create better or new content that way" because such online advertising usually only generates a small amount of revenue for most content producers.

The new YouTube pilot program, however, "incentivizes more people to create better content and to stay consistent with their content, while lowering the bar in which people can make money with their videos," said Maycock. "For content producers, they will finally get something out of their work."

By trying a pilot subscription model, "I think that YouTube is going after a Hulu or Netflix" and their markets, he said.

Consumers, though, are at least initially not going to be too thrilled with the idea of paying for content that they have received free on YouTube in the past, said Maycock. "I think consumers will initially resist it because they are used to the free stuff. But I think over time they will get used to it," especially due to the low initial subscription rates and the two-week trial periods offered by YouTube. "There are some people who are really addicted to some of the series' shown on YouTube, and they'll probably pay for that content."

Charles King, principal analyst of Pund-IT, said the initial YouTube 99-cent-per-month pricing for the subscriptions is "sort of the online video equivalent of the price of an app. I think that can be very attractive for consumers who are looking for specific kinds of content."

For video developers, the pilot program "gives them a new means of getting their content out to paying customers," said King.

This move actually could eventually be beneficial for consumers, as well, he said. "If this works the way YouTube intends it to work, what consumers could finally have is access to something they've wanted for a long time on cable television—the ability to specify exactly what channels they want to subscribe to each month. Right now, they are locked into cable channel packages with very few exceptions and can't specify the channels they want. Cable companies have insisted for years that it's too technically complex to do that."

Such an option could be game-changing to the world of cable TV, he said.

"If the HBOs and premium sports channels on cable television decide to do this same subscription model with YouTube in the future, it could be the death knell of cable companies," said King.

Rob Enderle, principal analyst of Enderle Group, said the move to a subscription option "was always in the cards for YouTube. They want to be the primary provider of content and to do that with video they need to have both professional and user work on the site. Ads don't generate enough by themselves to cover the professional work, as Hulu showcased, so there has to be an additional fee associated to cover the extra cost."

Enderle said he expects that the YouTube pilot will result in what becomes "a mix of free and fee content, at least for a while. But I do think that eventually we'll end up paying a fee to get better access to both."

Ultimately, YouTube had to make this move if they want to achieve their goal of capturing more users, said Enderle. The problem, though, could be Google's leadership, he said.

"There is strategy and execution," said Enderle. "I think the strategy is sound but Google has shown an almost complete disregard for understanding consumers, and that disregard could hamper this effort significantly as it may critically damage their execution."

In March, YouTube announced that it has grown to providing video content for more than 1 billion viewers per month. The popular video-sharing site has helped launch the careers of a slew of entertainers and made celebrities out of ordinary citizens, thanks to viral videos.

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