YouTube announced it could be introducing new paid options this spring, the latest in a string of experiments to find more effective ways of creating revenue. The strategy focuses primarily on subscriptions and will change the dynamic between viewer and video provider.
According to the Washington Post, the current plan will offer video contributors a few different routes to generate income. The channels may charge for access to special content, early access to videos or subscriptions for video access.
All channels would not implement the change, mostly preserving YouTube’s free-to-use foundation. Only about 25 of the most popular channel producers have been invited to apply for the necessary clearance to charge for content so far.
This is a step in the right direction for YouTube. Payment would be based on the number of views and subscribers, in addition to the other policy, which allows video-contributing channels to receive a cut of the revenue from advertising. This new option grants an entirely new source of income, adding a direct connection from the viewer to both the content provider and YouTube, which would open up the opportunity for a significant increase in cash flow.
That being said, this particular approach, as it is now, probably won’t produce the results it is hoping for.
Personally, I won’t be paying for any subscriptions. I have grown too accustomed to YouTube’s free-to-use methodology, and it doesn’t seem like other users would be willing to pay either.
Virginia Tech junior Zack Lawson said he would only consider paying if there were distinct and attractive benefits on top of the access to videos, while junior Jeffrey Bui relates paying for subscriptions to “paying to read the sports page in the local newspaper.”
Whether or not users will be willing to pay for YouTube content comes down to the concept of marginal value. By changing the independent variable of cost, the value of this service changes for each individual user. It is a complex process that is mostly governed by our subconscious, but it happens almost every time you purchase a good or service.
In order for this plan to succeed, YouTube will have to focus their efforts primarily on new users. It may seem more logical that the experienced users who have formed an allegiance to their favorite channels would be the ones most inclined to pay, but the vast majority of such users will be want to preserve the free-to-use aspect, willingly forfeiting the opportunity for special access to content, or access to the channel entirely. New users who haven’t grown to expect the videos to be free would be more willing to pay.
Finding the perfect balance where free-to-use Internet companies maximize revenue without becoming intrusive to the user continues to be the elusive Holy Grail among such businesses.
We saw it with the Facebook fiasco, where investors were not sure of where or how the site would generate the colossal revenue figures it had claimed to be worth. We also saw it with Groupon, whose seemingly instant success was quickly clouded by uncertainty with regard to revenue logistics.
But YouTube is making definite strides in discovering the appropriate blend of user-friendly and business-friendly operations. The company indicates great promise, and I’m excited to see what new innovations the company’s future has in store.