YouTube reportedly contemplating paid subscription channels

Bad news for flailing media companies, you’ll soon be competing for subscription dollars with the third largest social network in the world – YouTube.

According to AdAge, Google is introducing paid subscriptions to its video platform in the second quarter of this year.

Sources tell AdAge that YouTube has already approached a small number of channels, asking them to submit applications to create new paid streams, which would cost viewers between US$1-5 a month to access.

The paid channels are likely aimed at YouTube channel partners which already have a large following – such as Machinima (a gaming network), Ray William Johnson (a popular YouTube comedian), and Fullscreen (a music video and parody channel). The revenue split is expected to be similar to YouTube’s current 45/55 for ads.

It’s easy to see the allure paid channels would have on other non-YouTube content producers too.  Lower tiered traditional TV networks and standalone webisode creators struggling with building an audience, could tap into YouTube’s 300 million-strong user base to create new revenue streams.

The paid subscription model idea has been floated by YouTube several times in the past. In 2009, former Google CEO Eric Schmidt said in an earnings call that paid subscriptions could be used to supplement advertising. Last year it was mentioned by YouTube CEO, Salar Kamangar, at an All Things D conference, who said it was a natural progression which would benefit YouTube’s channel partners.

“Right now, you watch a three minute video, and every three minutes you decide what you want to watch next,” says Kamangar.

“The idea is that you’ll subscribe to a channel and you’ll go and just keep watching.”

While the barrier to entry is relatively low compared to paid-TV options here in New Zealand (a cup of coffee, compared to Sky’s monthly asking rate of a three course meal) – it remains to be seen whether users will easily be converted into paying to watch the type of web content that was once free.

StopPress has asked Google for comment.

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