YouTube Tiptoes Toward Paywalls With The Launch Of Channel Subscriptions, But The Ads Play On

While it would take you a million lifetimes to watch all the video on YouTube, the company relies on contributions from its amateur and professional partners to keep its content fresh. At the same time, its core business model revolves around providing advertisers with the ability to reach its billion-plus viewers. In turn, video creators rely (or want to rely) on a piece of that ad revenue to continue producing their content. The problem is, of course, that those ads are intrusive, annoying and, at the end of the day, its partners are finding that the revenue from those banners and clips isn’t growing nearly as fast as, say, the number of cat videos on YouTube.

In an effort to provide its partners with an alternative revenue stream, YouTube announced today that it is officially launching a pilot program that enables its video stars to charge subscription fees for access to their channels. Subscriptions will start at $0.99/month, and every channel will be able to offer a 14-day free trial, along with discounted yearly rates.

In its announcement, YouTube cites Sesame Street, which will offer full episodes through its paid channel, and UFC offering fans the ability to watch classic fights as examples. For more, here’s the list of its 53-odd pilot channels.

As of today, users can subscribe to paid channels from their desktops and laptops and watch across devices, but going forward YouTube will look to add the ability to subscribe from any medium/device. On top of that, YouTube will begin a broader roll out of subscriptions in the next few weeks for “qualifying partners,” and from the looks of it, it will be adding a paid channel recommendation feed — just as it does now for free channels.

If you don’t have a YouTube channel, why should you care? Well, YouTube has been telegraphing this for awhile, but it’s really the first (official) sign that YouTube is beginning to tiptoe into the paid video market. Granted, the subscription model isn’t a new idea for YouTube, considering the company just announced in March that it will be launching a music subscription service later this year.

The goal is much the same: Give musicians/artists/creators an opportunity to make some money, while improving the user experience for listeners by potentially removing some of those obnoxious ads that start every video. Of course, in the case of both video and music, it’s much more likely that YouTube is going to stick with both.

Amateur content creators are going to be hesitant about erecting paywalls around their content. Most viewers are going to balk at the idea of buying a subscription to a YouTube channel, and there’s a question of whether or not they’d really be able to convert enough of their viewers to paid subscriptions to make it worth it. In the end, it’s the same issue newspapers and publishers have struggled with for years.

There’s also the fact that every video producer is already offering their content for free, although behind ads. Now you’re going to tell viewers that they have to pay for the same content they’ve been getting for free? Sure, that will work for your superfans, but as is the way with the “freemium” model, if you’re going to charge, the content behind the paywall better be, well, premium. I want to see “Extras,” exclusive content/footage, and so on.

Of course, as Peter Kafka pointed out this week, amateur video producers likely don’t have the resources to produce that exclusive or premium content.

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Nonetheless, the company is going to use paid subscriptions in an attempt to attract new partners, new content creator and, we assume, more dollars — although YouTube doesn’t specify whether it will be taking a cut of subscriptions or not. YouTube is clearly aware of the success Hulu, Netflix, Vimeo and other video sites have been having with subscription and on-demand models, and it wants to become more attractive to film and TV networks, studios and producers.

But for now, YouTube can’t make the jump exclusively to subscriptions, because it needs those ad dollars that are keeping the whole thing afloat. It’s a tricky line to walk, no doubt, but YouTube certainly isn’t helping its user experience by setting up the potential to have both a paywall and ads in and around videos for the foreseeable future.

Just speaking for myself personally, I probably most frequently use YouTube for search (and a little discovery), particularly around music. In other words, I’ll have a song or an artist in mind, will do a YouTube search, which inevitably serves a couple or dozens of choices for the same song, artist or even subject. There’s a high likelihood that I have no idea which video I want or is best, which requires some perusing, so having a 10 second ad at the beginning of each video is really disruptive.

Maybe that’s a niche use case, but I suspect not. YouTube ads, while tolerable because we consciously or subconsciously recognize their role in keeping millions of cat videos afloat and online, are frustrating. Sure, Hulu has ads, too, and they aren’t much better. But at least in Hulu’s case, the viewer knows they’re watching a 30-minute or hour-long episode of television online, and regular old offline TV has already conditioned us to expect ads every 5 seconds. Unfortunately. But for a 2-minute clip of questionable quality? Come on.

So keeping ads, while slowly throwing up paywalls is just a bad idea. So the roll out of paid video will end up being incremental and almost just a show of good faith — to keep from ruffling feathers — while the ads just keep proliferating.