Pileup In The Pay Lane: YouTube Jumps In

The great thing about the ease of digital cinematography is that anyone can create video that can be seen around the world. That’s the bad thing too. Plus, many of those people want to be paid.

The video world is abuzz about YouTube’s plan to start a premium, commercial-free pay YouTube, possibly starting this year. Most of the stories say that would put them in competition with Netflix, Hulu Plus, HBO Now, Vimeo, and the new Vessel, which already are, or soon will be, offering pay channels for video of all lengths.

I tend to think YouTube has got to be thinking like that, but not so much from a jump-in-while-the-water’s-good standpoint. When everybody’s charging money to watch content, and consumers are carefully figuring what to pay for, you’d better not be last in line. If I’m paying for HBO Now, Netflix, Vessel, Amazon Fire, MLB, CBS All Access, YouTube’s own beta-testing Music Key and who knows what else, at some point, the wallet’s going to close.

YouTube is essential now. Maybe not a year from now. That seems amazing to say, but the shopping center is getting crowded with specialty stores.

In fact, a new Web site out of Iceland,, is launching worldwide today. It lets creators put their stuff up there, and here’s the wrinkle -- ”Every channel on OZ has a monthly subscription price. You decide your price – after all, it’s your channel!” according to the site. (Creators get 70%.)  It’s having its “global launch” event in Los Angeles tonight at the Ace Hotel. For nothing else, it’s worth going to see four top bands from Iceland.

Behind the scenes, of course, there’s a money war going on, which may be prompting YouTube’s pay endeavor. The new Vessel gives creators a much better deal than YouTube does, and to that end, YouTube now says it will give creators 55% from its pay subscribers’ take, pooled among all the channels, apportioned by use. That might not be so hot either.

The Verge says YouTube is thinking about charging $10 a month. To me, that’s an awful lot of money to avoid a piece of pre-roll, but maybe I know how to turn away from a screen better than some people. (And YouTube lets you opt out after a few seconds.)  

I’d also wonder if pay YouTube consumers are going to be fed the clever longer-than-average commercial messages--the Super Bowl kind-- that now go viral via the ad-friendly YouTube. Clever is clever but I’d hate to pay 10 bucks a month to pay for ads, regardless of their brilliance.

I’m sure I’m missing something.

YouTube did not spring this pay version on an unsuspecting public. (Indeed, I know about a million video types who have predicted it for years.) CEO Susan Wojcicki last October disclosed that YouTube was working on a pay site, while seeming to get all misty over the good old (current) days. 

“YouTube right now is ad-supported, which is great because it has enabled us to scale to a billion users, “ she said back then. But there’s going to be a point where people don’t want to see the ads.”

Apparently, we are at that point, no doubt helped by a healthier economy -- could you imagine a pay launch for Smosh in 2009? -- and competition from all the new players.

There’s also a now acknowledged recognition that however possible, many consumers just want to avoid commercials. Fortune’s report on YouTube’s new pay plan is headlined, “YouTube Plans Video Subscription Service Without Those Annoying Ads” and The Wall Street Journal today  reports on how ad blockers are becoming increasingly problematic for publishers -- up to 5% of users employ them -- and maybe worse on mobile devices than they can accurately discern.

The YouTube letter to creators says mobile viewing makes up more than half of its viewing, and ad revenue from mobile sources is up 200% year to year. That’s where YouTube’s future is.

Actually, though, it’s hard to tell exactly where YouTube’s future is. For a site with 1 billion monthly viewers, any missteps could be almost unbelievably catastrophic.

2 comments about "Pileup In The Pay Lane: YouTube Jumps In".
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  1. larry towers from nyu, April 9, 2015 at 3:33 p.m.

    This is a sort term idea at best. Here is what is really going to happen. Only a few well healed people will be willing to pay for all of these content providers without commercials. So just like the airline industry the content providers will make people flying in coach, the ad supported experience, more miserable to try to nudge more people into first class. And of course the advertisers are actually much more interested in the people that want to avoid their ads so there wil be enormous pressure to put sponsored content before and after the content the user really wants. Eventually ads will be everywhere only differeing in quantity.

  2. Paula Lynn from Who Else Unlimited, April 9, 2015 at 6:42 p.m.

    Getting all the programming you want from individual content providers, it could easily wind up costing more from...heaven forbid....cable companies. There will be crash and burns. The consumer will be more fragmented than ever and more advertising companies of all ilks will be buzzing over the queen bees. And we will all be paying more and more with more and more overlaps.

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