Silliest Argument Ever: Just Because A YouTube Paywall Launches It Means More Money Is Made

from the myths-myths-and-more-myths dept

On Tuesday, as rumors were spreading about YouTube's plans to launch a paywall we reminded folks that Google had actually tried this twice before and no one paid. On Thursday, the folks at HuffPost Live had me join a video panel discussing this. What we didn't realize was at the very moment we were talking about it, YouTube had officially launched the program. You can see the discussion below, where I play the role of the lone dissenter who argues that this is a dumb idea:
What annoys me about this is that everyone else was making the same silly arguments that were debunked over and over again on the newspaper side -- that paywalls lead to a higher quality product and more investment into the content. That's not true if no one pays. It's a pretty simple equation: if you, say, get 10 subscribers for $2/month, that's $20/month. That's not that much money. If you can make more than that in advertising, then you're better off advertising. Yet, time and time again in the video above you see people claim that it's somehow automatic that putting up a paywall will mean "more money" and "the end of free content" or "profits so that more investment can happen in video."

All of that makes a huge assumption: that enough people will actually subscribe. Yet there's simply no basis for it, and yet people kept claiming it over and over again as if it had to be true. But we know it's not necessarily true, because we've already seen Google try exactly the same thing. Hell, let's take a look at the original Google Video, launched about six years ago, with a similar subscription offering:
And now let's look at the new YouTube pay channels:
It's basically the same thing, though, I'd argue that the original Google Video had even more brand name content. In 2010, when Google tried the exact same thing with YouTube, over the course of 10 days, they only got $10,000. I'm not against experimenting. And I'm not against models where people pay -- I think things like Netflix and Spotify and the like are really interesting business models. But, those work because of different factors: mainly a combination of convenience and a ton of content all together. People are paying for those because of the completeness of the offering. Here, people are being asked to spend between $1 and $10 per month for a single channel of content. It may work for a few specialized shows: Game of Thrones? Yeah, sure. But not many others.

This idea that people paying directly is the only "real" business model is just silly. The guy who did a video comment during the panel discussion who seemed to argue that this was necessary because it's "capitalism" doesn't understand economics. A bad business model is a bad business model.

Filed Under: business models, economics, money, paywalls, video, youtube
Companies: google


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  1. identicon
    michael berkeley, 8 Jun 2015 @ 1:21pm

    youtube movies for dummies

    ummm, youtube is configurable, meaning its codable. You can code it so there is one result found. the trouble is these words will never drop from the google partner's mouth (SONY) because all you have to do to get an entire city to watch a movie on Friday night right there on their home smart tv is a new thing called "YouTube TV Spots" featuring the YouTube red button logo and a word finding one result. Important note here for all you non-tech people who don't know what I mean by configurable. YouTube is software, you can manually control it letter by letter. Look for this result "NO RESULTS FOUND." That tells you no one is using your particular phrase made up in the abstract. Once you find this invisible word, whatever it is. . example: YouTube iamheretorock

    There are no results found for this word. If you tag a video with it and the video shows up by itself, don't be surprised because you just coded YouTube for that word. Now make it cost 5.95 to watch. Then run your new wild and crazy commercial telling everyone its there in any city. The will crush the paywall once that word you created (it can be a hash-tag folks) finds one result in one city from hundreds of thousands of people sitting back with popcorn to watch it right then and right there at seven thirty or whenever you tell them to watch it. they don't need trailers anymore, ask redbox. Don't tell Netflix is on tv too. Or amazon for that matter, but you might want to tell anyone heading to the film festival about YouTube's local reach through configuration at least. Jeez.

    Michael

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