When the first announcements regarding the possibility that YouTube will introduce a range of channels that are only accessible for paid subscribers came out, most analysts viewed the venture as a risky gamble. However, as more details about the project began to emerge, it became apparent that YouTube actually had a very sound project in mind.
In case you are not familiar with YouTube’s newest “scheme”, let us put your mind at ease: the company does not plan – yet at least – to shift its ad-driven nature towards a paid version. A chance that over the years YouTube will transform into a Netflix or Hulu does exist of course, but that is not in their near-future plans. Let’s first discuss how this new strategy came to be.
Indie video content creators and their success story
Research conducted by YouTube showed that a number of channel owners were able to draw in a large crowd of loyal viewers thanks to the quality and utility of the content posted on a regular basis. The income of these individuals came primarily from the advertisements posted alongside the content, in the well known 45%-55% ratio which is pretty standard for YouTube ads.
These results revealed the possibility that the loyal fan base of famous channels might actually be willing to invest in paid subscriptions in order to gain access to the content. The payoff potential of this venture also looks encouraging if you take into account the success of producers such as www.lynda.com for example, a business that offers a vast array of educational content from several niches. Overall, the whole idea is that the management board at YouTube believes there will always be people willing and able to invest in subscriptions to sources of quality content.
What details have YouTube representatives released so far?
So far, we only have the statements released by the director of content strategy of YouTube, namely Jamie Byrne and the CEO of the company, Salar Kamangar. The former has suggested that the paid subscription model is currently formulated as an experiment and that the method of payment will be tailored in accordance to the individual category that the content falls under. In addition, Mr. Byrne stated that at this point there are two main approaches to the matter, more exactly:
- Standalone channels, managed almost entirely by the authors of the content who are remunerated accordingly
- Bundling paid subscription channels, where YouTube charges the viewers a fixed sum for access to the whole package
It is also necessary to point out that Jamie Byrne also mentioned that ads are not excluded completely from this venture model.
Salar Kamangar detailed the possibility that 2nd and 3rd tier cable service providers that were unable to attract a sufficiently large audience in order to afford the distributors’ subscription could also benefit from the introduction of the paid subscription channels. The costs of online content distribution would fit nicely into the budget of said cable companies and it also provides them with a direct link to the audience base, naturally at a lower expenditure.
The starting date and the initial participants
Both Jamie Byrne and Salar Kamangar were extremely careful not to divulge the actual date for the introduction of the paid subscription project, so we have no confirmation on their part. However, sources like Ad Age suggest that the venture will roll out in April, 2013. As previously mentioned, YouTube views the paid subscription channels as an “experiment”, which means that the number of participants is limited. In fact, according to their spokespeople, the number of channels will most probably not exceed 25 at the onset. Naturally, if the “experiment” is successful and the audience is in fact interested to invest in these subscriptions, the number of channels will grow.
A look at considerations
YouTube advises companies and content creators who have managed to gather up a decent or large size audience via the free channels to think carefully about the potential reactions of the viewers regarding a transition to paid subscriptions. While some may perceive it as natural and mandatory, others might be tempted to stick with the free content, feeling that they have been “cheated on” by their providers. It is also necessary to explain the new business model to the audience and conduct surveys on their opinions towards the matter.