When Google purchased YouTube for $1.65bn in late 2006, some wondered whether the acquisition would be the Web 2.0 equivalent of Yahoo’s ill-fated billion-dollar purchase of Broadcast.com during the first .com boom.
It was hard not to be somewhat skeptical: YouTube was an expensive operation to run and was facing the same type of legal assault from Hollywood that basically killed Napster 1.0 years earlier.
But under Google’s umbrella, YouTube has thrived. Usage is sky high, the company has managed to ink deals with many of the same content creators that once threatened to put it out of business, and although it doesn’t get nearly as much attention as Facebook and Twitter, YouTube is an important part of the social media mix for many brands.
Back to the future
Although it has been a revolutionary force in online media, YouTube’s evolution increasingly looks like it will follow a less revolutionary path. Take, for instance, Google’s focus on developing content channels. Not only is the concept of a channel a traditional one as far as media goes, YouTube’s deal structures for its original channel development are Hollywoodesque.
That may or may not prove to be a good thing in the long run, but with Google executives clearly taking pages from a Hollywood script, it’s no surprise that the subject of paid subscriptions has repeatedly come up. Last year, Google’s YouTube chief, Salar Kamangar, told attendees at the Reuters Media and Technology Summit that subscriptions were top-of-mind. “We don’t have anything to announce now [but] it is something that’s really important to a lot of our top existing content creators as well as ones that aren’t on YouTube today, so we’re taking very seriously and we’re thinking about it very carefully,” he was quoted as saying.
Less than a year later, it appears Google may be inching closer to making an announcement on the subscription front. According to The Android Police blog, the latest update to YouTube’s Android app has code referring to a “paid_channel_subscribe_message” and “paid_channel_unsubscribe_message.”
While this code doesn’t mean that a launch is imminent, or even that one will happen at all, it strongly suggests that Google is serious about pushing ahead with paid channel subscriptions and that plans to launch them may be at a point where technical implementation has already begun.
Obviously, if YouTube subscriptions are on the way, the biggest question is which content producers will be on board for the launch and what content they’ll be offering on a subscription basis. That, in a nutshell, will determine just how attractive channel subscriptions are to YouTube’s viewing audience.
Impact on marketers?
It will also determine just how important the addition of paid channel subscriptions is for brands. Brands have embraced online video, and given YouTube’s position in the online video space, it’s no surprise that YouTube’s ad offerings are widely used. Thanks to its success in acquiring professional, high-quality content, YouTube has become a must-cover platform for many marketers. That, in turn, has made YouTube a source of non-negligible revenue for some content owners.
If content owners that launch paid channels choose to make those channels ad-free, however, marketers may find themselves unable to capitalize on some of the content that will ostensibly be of the highest quality and greatest demand. On the other hand, if, as is the case with many cable networks, paid doesn’t mean ad-free, some of YouTube’s ad inventory may see its stock rise significantly as marketers clamor to get their messages in front of an attractive new audience — paying subscribers.