Are you ready to pay for YouTube? Earlier this week, YouTube (s GOOG) 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 (S NFLX) 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.