YouTube Once Again Building A Paywall On Which Old Media Can Hang Itself

from the haven't-we-done-this-before dept

People seem really good at forgetting history. While most people realize that Google bought YouTube early on in that company’s existence, they tend to forget that this was, in part, because YouTube was beating the pants off of Google’s own online service called Google Video. The big difference? Google Video’s launch focused very much on selling videos and using annoying DRM that had to check in with a server any time you wanted to watch. It was a complete and total failure, which probably cost an even larger amount when you realize it made Google more desperate to buy YouTube.

A few years later, Google tried again, playing up the ability to pay for videos… and once again it flopped pitifully. A 10 day test brought in just a little bit over $10,000 — which is hardly worth the effort involved.

Perhaps the third time’s the charm? People are reporting that YouTube is getting ready to launch a paywall feature, which may have 50 “channels” locked up behind the wall. The idea is to be more of a Hulu or Netflix-type competitor, though rather than a flat fee for access to all locked up content, YouTube thinks people will pay $1.99/month per channel. That seems… pretty high. Perhaps they’re hoping that times have changed and what failed in the past is now okay because people are accustomed to paying for this kind of thing. However, I still have trouble seeing how this succeeds. If anything, this just seems like a tool with which Hollywood can hang itself. It may jump on this thinking that it’s a great new way to build an online revenue stream, without realizing all the potential hazards.

Cable and satellite channels, which traditionally rely on a dual revenue stream model, are eyeing YouTube’s subscription service to generate revenue from older shows and new programming, according to another person familiar with the project.

I’m sure plenty of old school execs are thrilled about this idea… until they see the actual numbers. This isn’t about helping the old industry adapt, but giving them the tools to see how unlikely they are to succeed with a paywall.

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Comments on “YouTube Once Again Building A Paywall On Which Old Media Can Hang Itself”

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56 Comments
Anonymous Coward says:

Re: You know...

That would be a true loosing strategy since Netflix etc. are working fine with an only slightly diffenrent concept and Twitch has a premium quality where the highest quality takes a subscription.

This one is set up to fail unless the channels are in very high demand. Of the current crop, I do not believe that much more than 1 or 2 channels, can actually get close to keeping up their current income-

AzureSky (profile) says:

Re: Re: You know...

I would agree, but,there are many things that have been pulled from netflix because MAFIAA companies want more profit, they feel their content should be worth more then they where getting.

many MAFIAA companies would love nothing more then to be able to charge you for each time you view/listen to content.

I can see this as being a reaction to those desires, if it works, fine it makes some money for google and the mafiaa, if not, its yet more evidence that their greed is causing them to loose money.

Tex Arcana (profile) says:

Re: Re: Re: Re:

Not really, no one wants to pay for low-quality videos, no matter how close to decent the quality gets.

YouTube doesn’t work everywhere, it doesn’t work on all platforms (I can’t watch about half the content on my iPad), and it definitely doesn’t stream well on anything at or less than 6mbps.

Unless they drop the price to near-nothing, it will fail. People will only ay once for content; and if they have cable/sat, they’ve paid once, and can watch again for free off the providers’ sites.

So no: fail.

Anonymous Coward says:

Re: Re: Re:

They have a shot. I’m thinking directly about the Funimation channel, which charges ?$8/m? directly and does have a presence on YouTube. I think the major hurdle is to convince publishers to consolidate offerings at such a low price point, when some like Funimation, HBO Nordic, etc are trying to take a direct route.

Tex Arcana (profile) says:

Re: Re: Re:

This is yet again a major-league FAIL. And if they do it, they will lose MILLIONS of customers that see their ads daily, that sometimes click their ads, that sometimes buy from those advertisers. What’s worse, if they do this and fail, they could very well kill their own company–because, who is likely to trust a search engine that skews the results toward the paying advertisers, instead of giving accurate results?? Bing isn’t much better, but if they create the illusion of accuracy or impartiality, then people will flock to them.

In all honesty, tho: I think someone will create a search engine aggregator, that will filter out the obvious payad stuff, and rank things accurately; and THEN Google et al will lose usership, and lose even more revenue as the advertisers jump ship. And that new aggregator will become the new google, and everything will shift again.

Unless, of course, Google pulls their collective heads out of their collective asses, and does something right for a change.

S. T. Stone says:

I think the braintrust at YouTube failed to realize exactly why Netflix and Hulu work as well as they do as pay services: the abundance of content. When you pay for Hulu Plus or Netflix, you get thousands of hours of content right off the bat.

How much content do these paid channels plan to provide right off the bat? How much content do these paid channels plan to provide on a regular basis? What do the groups behind these paid channels consider ?a regular basis?? How will these paid channels provide enough value for their service to make paying $2 a month worth the cost?

If neither YouTube or its future ?paid channel? partners don?t know how to answer these questions in a way that makes them sound consumer-friendly, maybe they didn?t think their cunning plan all the way through.

out_of_the_blue says:

Wrong take. It's that the Youtube "free" model doesn't work.

Gosh, that seemed obvious when read it days ago, kept it handy to gig you with. But you came up with such a wacky mis-take that you foiled me!

“If anything, this just seems like a tool with which Hollywood can hang itself.” … Umm, HUH? How the HELL can you even TRY to turn this against them? In my view, “Hollywood” is just going to sit back and watch Youtube fail (financially, though Google may subsidize it indefinitely), and thereby PROVE their notions.

Youtube isn’t actually making money so is putting up a paywall, JUST LIKE those you call “dinosaurs” attempted. — Oh, that reminds me. Turns out you’re wrong yet again on that very point, some paywalls DO work!

http://www.mediapost.com/publications/article/199331/pay-walls-boost-some-newspaper-circs.html#axzz2RzNz20zG

“While publications of all sizes have benefited from digital subscription strategies, big names continued to lead the way. The Wall Street Journal maintained its lead as the country?s biggest daily newspaper, with weekday circulation increasing 12.3% from 2,118,315 in the six-month period ending March 2012 to 2,378,827 in the six-month period ending March 2013.

Over the same period, The New York Times saw total weekday circulation jump 17.6% from 1,586,757 to 1,865,318, and the Los Angeles Times, which implemented its own digital paywall last year, increased 6% from 616,575 to 653,868. The Chicago Sun-Times saw weekday circ grow 11.6% from 421,780 to 470,548.”

SO, Freebie Mike, you STILL need to adjust your notions to reality.

Beech says:

Re: Wrong take. It's that the Youtube "free" model doesn't work.

What gets me most these days is that ootbs grammar is so fucking horrible i can’t even understand what the fuck he’s trying to rant about. somehow i don’t think im any worse off as a person….

“Wrong take.” Sentence fragment. There’s no verb so the reader wants to read “take” as a verb. “You have the wrong take” sounds SO much cleaner.

“Gosh, that seemed obvious when read it days ago” WHAT seemed obvious when WHO read it?

“kept it handy to gig you with” kept WHAT handy? gig you with? wtf? i’ve heard the word gig used as a noun (“im playing a gig tonight”, “the gig is up” etc. ) but never a verb! maybe it’s an archaic use? but even then, who talks like that? maybe like a 1920’s hard-boiled detective trying to find a macguffin for some dame….?

“mis-take” i know what you’re trying to say, maybe…but it looks like you’re a big enough of an idiot to try to hyphenate the word “mistake”.

And after that first paragraph i just can’t bring myself to read the rest of your monster post because who knows what linguistic horrors may be lurking below.

Anonymous Coward says:

What I'm still waiting for...

…is an online movie service which *doesn’t* require me to “sign up monthly”. I’d rather pay a higher (maybe even as high as renting the DVD) price and watch a movie I choose, when I choose to.

And not having to pay while I’m too busy or on vacation overseas to make use of a subscription service.

Or have I missed recent developments? Oh, I forgot: I’m in Australia.

Viln (profile) says:

Here's the thing...

We view free video sharing sites as we do radio… the goal is exposure, generating attention and interest and (one hopes) translating that into secondary sales/profits for additional content or value. I think it’s fair to say a paywall (particularly $2 per channel) would reduce views/subscriptions by at least 95% right up front, probably closer to 98 or 99% in the long term when you consider the millions of casual views. That’s millions of opportunities to create customers lost because you’re treating the video itself as the product.

Only the best, most innovative and most dedicated/updated channels will be able to generate enough subscriptions to be profitable… and they’ll have to have an extremely strong brand or high popularity before secluding themselves behind the paywall. Frankly I can’t think of 50 channels that fit that bill… and they’re calling this a first step.

Either they’re trying to sell themselves as a vehicle for big media to use, the way Facebook supplanted many companies’ websites, or they’re going to have to lower the price and bundle the homegrown content to make it appealing.

horse with no name says:

hammering paywalls

I see that Techdirt is back to hammering paywalls, yet it was recently revealed that the newspaper industry (buggy whippers by local standards) are doing excellent stuff with their online subscription models, and many are seeing the first bottom line upswings that they have seen in ages in their business.

Basic fact of life: Somewhere, somehow, someone has to pay for content to be created, and they generally want to earn a profit for doing it. Until you grasp that basic business concept, you will continue to flail against the obvious concept that paywalls (scare word!) are part of the future.

PaulT (profile) says:

Re: hammering paywalls

“Somewhere, somehow, someone has to pay for content to be created, and they generally want to earn a profit for doing it.”

Yes, they do. The fallacy is the belief that this has to be done upfront before any content can be accessed, rather than by the many other means available. Which it was for many years even before online content (most of the newspapers’ woes are not down to people getting their news for “free”, but rather that the mechanisms that kept the prices artificially below their production costs have moved online or are less lucrative – classifieds, subscriptions, advertising, announcements, etc. Read the actual articles here, and you’ll see the actual reasons why paywalls are frowned upon. The “people want everything for free” crap is just that – a lot of crap that misses the actual opinions stated.

Plus, it’s been discussed many times that while the paywalls seem to have been financially more successful than expected, this has come at a loss of readership. That’s a business’s prerogative and maybe a good strategy for some, but it’s inevitable that significant readership will be lost once content needs to be paid for directly. I, for one, tend to take “you have to pay to access this article” as an instruction to find the content elsewhere. I do pay for a lot of content, of course, but not all of it directly (as you don’t pay for the content here).

But you do seem to be a regular anonymous commenter with a habit of both missing the points being raised and addressing opinions that have never been stated, so I think you probably know all of this and are just being contrarian.

horse with no name says:

Re: Re: hammering paywalls

Contrarian? On the contrary (pun), I am only pointing out that in this case and many others, important information is not on the table. I am not a regular comment writer, I only add when I think it’s needed.

The dinosaurs of digital media (like Michael Wolff in this article http://www.guardian.co.uk/commentisfree/2013/apr/01/tipping-point-paywalls-newspapers-crisis ) can’t seem to grasp it. Yet, We see examples like:

http://www.emediavitals.com/content/paywall-success-stories-three-newspapers-using-metered-model

with three models that are working well. Even Wolff grudgingly admits that certain paywalls are working. There must be something in the air, because more and more newspapers and news services are moving toward subscription based services, even if that subscription is only the price of your email address to accept spam.

Combine that with companies like Facebook and Google starting to turn the corner on mobile advertising, and you can see a very viable future for the news models. Those that will suffer will be those sites who mooch the news off of others, example a site like run by Matt Drudge. Their popularity will wane if they are unable to provide non-subscription links to stories.

PaulT (profile) says:

Re: Re: Re: hammering paywalls

“in this case and many others, important information is not on the table”

It’s part of an ongoing discussion, and the other articles on the subject outline these things quite well. Everything’s on the table, it’s just that not every point is repeated in every single article.

“I am not a regular comment writer”

I’ve seen your name pop up a few times, often posting anti-Techdirt stuff that bears suspiciously close relation to the troll contingent here or repeats regularly held fallacies. I apologise if I misinterpreted you, or if your name is being used by more than one person and thus causing confusion.

“with three models that are working well”

There are many other models working well that don’t depend on paywalls or other forms of pre-payment. So?

I also can’t help but notice that you reject outright the opinions of those sceptical of paywalls without giving any reason other than cherry-picked examples of those who have found some success. I’d also argue that the 3 local US newspapers cited in the second article are by their nature very different beasts to the national and international brands discussed in the first article. Local small businesses can survive on business models unsuitable for international ones? Who knew?

The argument isn’t that nobody can make money with paywalls. The argument is that it’s very often not the best way to do so, and that it has other side effects (e.g. much lower readership and exposure despite making profit) and questions of long-term sustainability.

“even if that subscription is only the price of your email address to accept spam.”

That’s not a paywall, unless you’re counting those that let you have X number of free pages before demanding payment. Actual paywalls involve monetary transactions, otherwise all you’re doing is blocking all anonymous views in return for an email address that might not even be in use (most tech savvy people have disposable addresses to use for sites that send spam, plus is spamming people really a business model?).

Don’t try to muddy the waters by redefining paywalls are requiring something other than money to access them, since there’s a huge number of sites that require logins that don’t require monetary payment and have never been termed “paywalls”. The paywalls being discussed are those that require monetary payment.

“Combine that with companies like Facebook and Google starting to turn the corner on mobile advertising”

Advertising also has nothing to do with paywalls, at least not directly. It can be part of the model, but they’re 2 separate things.

“Their popularity will wane if they are unable to provide non-subscription links to stories.”

As will the popularity of the sites those links drive traffic towards now. They may remain profitable, but that’s a very different topic.

Mike Masnick (profile) says:

Re: Re: Re: hammering paywalls

I am not a regular comment writer

… well, under this name, right? What is this, your 6th or 7th “persona” on the site? You took a bigger break this time than last.

What amazes me is that you never change your writing style (other than that one time when you couldn’t type capital letters — remember that?). It’s obvious its you every time you pop up with your logic free arguments.

silverscarcat says:

Re: hammering paywalls

Um, no, paywalls are NOT the source of the future.

In fact, you could probably look up the history of webcomics that used paywalls to get money. While they used paywalls, they were going broke and decided to end the comic in a month, so, for the final month, they dropped the paywall and let people read for free.

Something amazing happened when they did that.

They started making money.

So much so that they didn’t need to shut down by the end of the month. By the end of the 2nd month, they finally turned a real profit when they had ran the paywall for years.

Marcel de Jong (profile) says:

Re: Re:

Youtube is way more than just cat videos and music videos.

There are full length episodes of online only original content on there. From ‘networks’ such as Geek and Sundry, Vsauce and Jupiter Broadcasting. To name three off the top of my head.
http://www.youtube.com/user/geekandsundry Geek and Sundry.
http://www.youtube.com/user/jupiterbroadcasting Jupiter Broadcasting
http://www.youtube.com/user/Vsauce Vsauce

Also there are the Google Science Fair lectures: http://www.youtube.com/feed/UCAn-f5AvAospCM1Jzgn9QHw

Rikuo (profile) says:

I do have to ask the question – what makes the content on these “premium” channels well…premium? What makes these pieces of content so much “better” than all the other videos one can view for free on Youtube?
Youtube, for the past 8 years, has trained its audience to expect all content on its site to be free. If you say the word “Youtube” to anyone, the very first thing that pops into their head is “free video”.
Now they’re doing a 180. Now, they’re going to try and do the opposite? Sorry mate, but no. I don’t buy it (figuratively and literally).

Anonymous Coward says:

YouTube revenues come from advertising, which is pretty damn lucrative. http://allthingsd.com/20120621/youtubes-gigantic-year-is-already-here-citi-says

The “Free” service is provided off the back of that.

Regular Joes can get a piece of this action by putting adverts on their cat/dog/other videos. Cory Williams is the best example of this: http://www.businessinsider.com/this-guy-is-making-6-figures-off-his-youtube-videos-for-simple-minded-people-2010-9

The idea, then, that Google can’t make money from it and we can’t make money from it is fallacious.

As for paywalls, they may have some value as a revenue stream for Google, but they’d be better as a bundled service or watching stuff you want could cost a fortune. $100 a month for your favorite content is a bit much, and it could get to that if the stuff you want is spread across different channels. An ad-supported revenue stream with an optional ad-free subscription service seems like a better option, but they need to make it worth our while or it will flop.

Ninja (profile) says:

There are a ways for this to work wonders. The first thing that needs to be done is to offer free content that serves as some sort of teaser to the rest of the channel. The second would be to slash the price to less than half a dollar (assuming the price will be standard) or offer it incredibly cheap. Youtube could also offer single “unblocks” for very little (ie: if you want to watch a specific video that is paid you would fork a few pennies, maybe Flattr style). And Youtube could offer the content without advertising. It is incredibly annoying to watch these mandatory ads. I don’t mind some text based ads or even some banners but get away of the video please.

MD says:

Devil is in the details...

We need to see what you get for $1.99; it’s not $1.99 a mnth if you must sign up for a 6-month or 1-year minimum… If they decide to sell say, Sopranos or Lost or Big Bang or Game of Thrones etc. unlimited views for a month for$1.99 (marathon weekend, anyone?) they may have discovered a new business model that will rake in the money. I seriously doubt they can get the contracts to do so.

Firewalls might be moderately successful in medium sized towns with an older population that care about local events – although it seems one paper in the article snuck a very low-cost web charge onto the print subscription, then called it a success when not many people cancelled. In a bigger market, it’s hard to compete with free, which is what all the other media – TV, radio and their web sites – are providing.

In the long run – we ca only watch one show at a time (usually) and our attention span and leisure time is limited. The ideal situation would be to set a price for that and divvy it up according to our attention – essentially a single-subscription model. However, this would require a level of cooperation by providers and suppliers nobody has reached yet. Hence, advertising as the best measure of this attention paid.

tywebb (profile) says:

How can this not be seen as a positive thing? Assuming the content offered is good quality, this will result in more consumer choice in the marketplace. So many have groused “if only HBO was an a la carte offering, I’d gladly pay for it rather than steal Game of Thrones.” Now YouTube is at the initial stages of attempting to give you exactly what you’ve said you wanted – premium channels offered a la carte – but instead of focusing on the potential upside you pick it apart. Wah, $1.99 seems steep. I guess if it’s not free, it’s never worth it.

DCX2 says:

Re: Re:

People aren’t getting GoT-level content for $2 a month. They’re getting Jenna Marbles-level content for $2 a month. If they’re lucky. That’s not a shot at Ms Marbles, but instead it’s intended to point out that most YouTube channels are solo operations and GoT requires many more people to produce.

Suzanne Lainson (profile) says:

Re: Re:

Now YouTube is at the initial stages of attempting to give you exactly what you’ve said you wanted – premium channels offered a la carte – but instead of focusing on the potential upside you pick it apart.

That appears to be exactly what they want to do. YouTube is going after the video-on-demand cable market.

YouTube, World’s Largest Video Portal, to Charge Viewers for Select Channels | The Wrap Media

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