YouTube planning new video subscription service, but where does Music Key sit in all this?
Yesterday YouTube emailed video creators on the platform revealing its intention to launch a video subscription service by the end of the year.
The email states:
“Since inviting hundreds of thousands of fans into our YouTube Music Key Beta, we've seen tremendous engagement. And we've seen an equally enthusiastic response for our new YouTube Kids app, designed to give families a simpler and safer video-viewing experience— it’s already crossed 2 million installations in less than one month.
We’re excited to build on this momentum by taking another big step in favor of choice: offering fans an ads-free version of YouTube for a monthly fee. By creating a new paid offering, we’ll generate a new source of revenue that will supplement your fast growing advertising revenue.”
The move is not entirely unexpected but it raises a lot of question marks around how this new service will integrate with YouTube Music Key, which is another subscription service dedicated solely to the company’s music offering. If you are a YouTube Music Key subscriber, will you get a discount on this new service? What ‘extras’ will Google give you to fork out another $10 per month? For now there are no clear answers to these questions.
Even though YouTube is still the undisputed king of online videos, the service is under a lot of pressure. On the one hand Netflix is taking the wind out of its sails - Bloomberg reports that YouTube’s share of streaming traffic fell 14% during peak hours in North America during the second half of 2014, and on the other hand, Apple is said to be in talks with the major cable TV networks to offer a comprehensive package to Apple TV customers by the end of the year, one that will be difficult for Google to rival in terms of breadth and quality of content.
For now YouTube has not revealed whether it plans to allow all videos on YouTube to be ‘cached’ by paying subscribers to be consumed on the go - an interesting feature that YouTube Music Key does sport. It certainly seems like the company will need to offer more than just an ad-free experience since the "YouTube Generation" does not appear to mind pre-roll advertising too much.
The big issue with the new service, and the reason why some YouTubers may be up in arms about the letter, is that creators will have to sign up to these new terms and conditions in order to continue monetising their content through advertising, and although the letter does state "Please look out for our notification, review it and let us know your thought", the experiences of artists like Zoe Keating suggest that YouTube is unlikely to act upon those thoughts in a hurry.
In terms of splits, the service will keep 45% of revenues and creators will get 55%, although it is not clear as to how that revenue will be distributed. It would be refreshing to see YouTube re-direct the 55% just to the creators of the videos that have been consumed by a given user over a particular month and it could potentially give creators of niche content an interesting new revenue stream. If - however - YouTube’s service plans to operate like music streaming services and the payments will be a "standard" few cents per video the majority of the cash is likely to flow towards the largest MCNs and creators on the network.
(Andrea Leonelli)