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Thursday, May 9, 2013

YouTube Launches Subscription Service

After weeks of rumors, YouTube confirmed Thursday it is getting into the subscription business.

The Google owned property launched a pilot program whereby 30 channels will charge as little as 99 cents a month to subscribers who want more content than is offered up free.
Some of the participants include UFC, Sesame Workshop, National Geographic and Magnolia Pictures.

Malik Ducard, director of content partnerships for YouTube, called it an extension of a partnership program launched in 2007 whereby YouTube attaches advertising to popular videos and splits the revenue with creators. 

Through that arrangement, along with a more recent effort whereby YouTube has loaned about $250 million to a couple of hundred channels it has partnered with, there are now 1 million channels that are generating revenue at YouTube.

YouTube boasts 1 billion users per month. While they have shown a willingness to sit through a 30-second ad to get access to the videos they seek, it's unclear whether they'd go through the hassle of another entertainment subscription service. Ducard said Thursday he had no projections on what percentage of YouTube users might sign on.

Ducard said the average price for the channels will be about $2.99 a month. As of now, $7.99 is the most expensive channel planned, though ones featuring mainstream TV and movie content could be forthcoming and they might command higher prices. Eventually, enough premium content could make YouTube a more earnest competitor with Netflix, and Hulu.
"This is really just the beginning," Ducard said in a conference call with reporters.

Subscribers will pay via Google Wallet, a digital, mobile payment system.

The pilot program will quickly expand to other "qualified" channels via a self-service program coming in the next several weeks, Ducard said.

Much of the content will be on-demand and some with ads, but Ducard says there is the capacity for showing live events to subscribers, as well.

YouTube made the announcement via a blog 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," the post says.

Google also debuted a list of the 30 channels in the pilot program.

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