YouTube to add paid subscription

[Russic]

Like most things I expect the powers of capitalism to handle this. Content that is of quality will probably make a good deal of money, while content providers who slap a price on something people don't actually care about will either fail or go back to a free model as soon as they realize it isn't working.

If you think about how YouTube is now, a paid model doesn't make a lot of sense. However, if you look at what this could do for the future of the platform it gets more interesting. What if something like Firefly returned to Youtube for $1/episode? The Oscars for $5? Suddenly cord cutters might have an easier time getting rid of cable. I'm just guessing of course, but the potential is there.

[Hemi-Cuda]

Originally Posted by sclitheroe

I'm surprised people are generally thinking in this thread that it's the amateur crap Google is going to monetize via paid channels.

This is Google's foray into the world of Spotify, Pandora, NetFlix, and Hulu, using the biggest and best known online streaming brand in the world. In particular, it addresses the streaming music segment very nicely for their mobile division.

Think bigger.

Exactly, just look at the current list of paid channels

http://www.youtube.com/channels/paid_channels

The Youtube that everyone knows isn't going to change, they're just adding a new section

[jammies]

Originally Posted by sclitheroe

I seriously have no idea what you mean when you say Google's business model is not sustainable..

Google's is, just not the Youtube part of it - should have made that clear. I can't really find any reliable estimates of its revenue from Youtube, though. Maybe they are making craptons of money, despite infrastructure costs that you would think would be much higher, and effectiveness on getting clicks, which you think would be lower.

Look at it this way. I watch a 3-5 minute Youtube video, I see one ad popup in the window. Do people spend an average of 3-5 minutes on each web page they view? Does the average web page have just one ad? It's simply not even remotely as efficient at delivering click-throughs.

I assume they must be charging big money to advertisers who have the 15-30 second clips that sometimes run at the start of videos. But unlike television, where (until recently), you more or less had to watch the ads, you aren't forced to watch those clips. Even if you are too lazy or technically inept to install browser add-ons to get by them, you can still click past them. And if you start forcing people to watch them, again, how do you stop people from eventually migrating to another source for their videos that doesn't make them do so?

Maybe they are about to launch their own subscription service for premium content. That they are going to do so doesn't make me think that Youtube is making money, though, it makes me think they are realizing that ad revenue is not magic that turns every single "free" product into a profitable one.

[Teh_Bandwagoner]

I don't see the issue either. It's not like you're being forced into watching paid content. What if for instance AMC chose to put the newest episodes on Walking Dead in HD up for $1 on youtube? I'd totally pay that. I don't subscribe to AMC HD so that would be great for me.

It could work, depending on the quality of the content. Hell, maybe they could challenge Netflix for downloadable content.

[Azure]

So you basically have no clue how they monetize the site, which leads to you assuming they don't know how to make money, and therefore their business model - which generates almost $100 billion per year in revenue - isn't sustainable.

Think of it this way. Someone produces a pilot episode of a new show, and pitch it to FOX, ABC, NBC and the various other networks to try and get them to pick it up. If the pilot is good, one of the networks will order a full season of the show. What exactly is stopping YouTube from getting involved into this process as well, and ordering full seasons of shows and offering people a subscription to a channel on YouTube that lets people watch them?

I'm not sure how the numbers work, but Netflix is currently creating their OWN shows in Hemlock Grove, House of Cards and others, and allowing people to watch them for less than $10/month. Similar to this, I'd imagine if Google charged $5/month for a certain channel that shows a show like 24, people would pay for it. And Google has a lot of money to pump into creating new shows.

This is a lot bigger than people think it is.

[Rathji]

I read into this yesterday and realized this is actually much better than I originally thought it was.

This could potentially have YouTube be directly competing with services such as Netflix, Amazon Prime and iTunes, as it provides an completely a la carte subscription model.

For example, one of the main uses of my Netflix account is for TV for my kids. If that's all I used it for, with this, I could have access to Treehouse for $2.99 a month or $24.99 a year. The same channel on Shaw is $10 a month for the entire package and Netflix is $8.99 a month.

[Azure]

Originally Posted by Teh_Bandwagoner

I don't see the issue either. It's not like you're being forced into watching paid content. What if for instance AMC chose to put the newest episodes on Walking Dead in HD up for $1 on youtube? I'd totally pay that. I don't subscribe to AMC HD so that would be great for me.

It could work, depending on the quality of the content. Hell, maybe they could challenge Netflix for downloadable content.

There are probably room for both models to work. Some people don't have a problem paying $9/month for Netflix and the ability to watch whatever they want, as much as they want.

And some people would rather pay the $1-2/episode on YouTube, if it comes to that.

We had a thread recently on HBO, privacy, and how the fact that they weren't offering a way for anyone to subscribe to their 'channel' online at a monthly rate, or per episode rate.....was contributing to shows like Game of Thrones being pirated like crazy.

I suggested that because YouTube already had the infrastructure in place to upload any video you want, and have it reach every single internet connected household in the world with in minutes, why doesn't HBO use YouTube as their delivery model, and charge people to subscribe.

Netflix has hard data that when they offer their service in a certain country/region, torrent downloads drop. So we know piracy is directly affected by the online delivery model. Which suddenly puts this move by YouTube at the forefront of the industry.

[jammies]

Originally Posted by Azure

Think of it this way. Someone produces a pilot episode of a new show, and pitch it to FOX, ABC, NBC and the various other networks to try and get them to pick it up. If the pilot is good, one of the networks will order a full season of the show. What exactly is stopping YouTube from getting involved into this process as well, and ordering full seasons of shows and offering people a subscription to a channel on YouTube that lets people watch them?.

Nothing is stopping them from doing that, but that would be changing their business model, not proving their model is sustainable.

RIGHT NOW (and since the inception of Youtube, before they were bought by Google) their model is attach ads to free content that they do not own. Saying "Oh, well they can do X, Y, or Z to cash in on their brand!" is not disproving this, it's actually strengthening the claim that their current model is likely not making money.

Not that it's definitive, but it's telling that most of the items I could find on estimated Youtube revenues put them in the 1.7 to 3.4 billion dollar range, and this for a service with over 6 billion views a month. There's articles promoting Youtube as more popular than television, and yet television in its various forms had revenues of over $70 billion in the USA alone last year.

As for claims that they must know what they're doing, there's been plenty of companies that were successes for a while before cratering, especially in the tech industry. Google itself has had lots of projects that were eventually scrapped when it was determined they weren't going to make money, so the rumours of their infallibility are grossly exaggerated.

[sclitheroe]

Originally Posted by jammies

Google's is, just not the Youtube part of it - should have made that clear. I can't really find any reliable estimates of its revenue from Youtube, though. Maybe they are making craptons of money, despite infrastructure costs that you would think would be much higher, and effectiveness on getting clicks, which you think would be lower.

Look at it this way. I watch a 3-5 minute Youtube video, I see one ad popup in the window. Do people spend an average of 3-5 minutes on each web page they view? Does the average web page have just one ad? It's simply not even remotely as efficient at delivering click-throughs.

I assume they must be charging big money to advertisers who have the 15-30 second clips that sometimes run at the start of videos. But unlike television, where (until recently), you more or less had to watch the ads, you aren't forced to watch those clips. Even if you are too lazy or technically inept to install browser add-ons to get by them, you can still click past them. And if you start forcing people to watch them, again, how do you stop people from eventually migrating to another source for their videos that doesn't make them do so?

Maybe they are about to launch their own subscription service for premium content. That they are going to do so doesn't make me think that Youtube is making money, though, it makes me think they are realizing that ad revenue is not magic that turns every single "free" product into a profitable one.

You're still thinking way, way too small. How much money they make off direct ad placement for a service like YouTube is probably almost 100% irrelevant to their bigger aim, which is to learn _everything_ about you and your demographic, so that they can properly monetize advertising to you across the Google network and network of partners/customers. Knowing what media you consume, about what topics, when, where, for how long, how often, who else you know, on what platforms, and most importantly, long term trends in viewing habits, is of extreme value to their aims.

Thinking about advertising revenue as being tied to number of views and clicks is old-school, and too small for Google - they raise revenue by raising the premium they charge for the ability of companies to advertise directly to the perfect customer. They've stated on more than one occasion that they intend to get to a point where they can anticipate needs before you perceive them.

A lot of what Google does, including YouTube, is less about getting the volume of ads up and raising revenue that way, and more about getting the value of you as a consumer data point up for sale to their advertising clients. YouTube is almost more of a honey-pot for consumer behavioral data, rather than a vehicle for raw, volume based advertising. Same with GMail, G+, Google Maps, Google Now, etc.

Put bluntly - Google doesn't need to show you an ad on YouTube when they know, with a high degree of computational certainty where you are headed after YouTube, where you'll be tonight, what inbox items you read in your email tomorrow morning, what you're likely to eat for lunch (and where) on Saturday, etc. They'll get their marketing in, don't you worry.

Read this article, then contemplate YouTube in the context of what Target accomplished, but at Internet scale and with the breadth and reach of Google.

http://www.forbes.com/sites/kashmirh...er-father-did/

They say the eyes are the windows to the soul, and Google knows what your eyes are peering at thanks to YouTube. It's a highly strategic asset to them, irregardless of how much profit it actually generates.

[Azure]

Originally Posted by jammies

Nothing is stopping them from doing that, but that would be changing their business model, not proving their model is sustainable.

RIGHT NOW (and since the inception of Youtube, before they were bought by Google) their model is attach ads to free content that they do not own. Saying "Oh, well they can do X, Y, or Z to cash in on their brand!" is not disproving this, it's actually strengthening the claim that their current model is likely not making money.

Not that it's definitive, but it's telling that most of the items I could find on estimated Youtube revenues put them in the 1.7 to 3.4 billion dollar range, and this for a service with over 6 billion views a month. There's articles promoting Youtube as more popular than television, and yet television in its various forms had revenues of over $70 billion in the USA alone last year.

As for claims that they must know what they're doing, there's been plenty of companies that were successes for a while before cratering, especially in the tech industry. Google itself has had lots of projects that were eventually scrapped when it was determined they weren't going to make money, so the rumours of their infallibility are grossly exaggerated.

They have never tried to monetize the site. In fact they ran it without ads for years. Obviously they are not concerned about how most it costs them to run it from day to day, as it serves a greater purpose for Google in the long run.

So therefore you have no clue what their business model is for YouTube. I highly doubt that their end result will be to serve up ads in videos. Even commercials in videos are probably small time for them.

Think bigger. WAY bigger.