Going In The Red For Youtube
People watching videos on Youtube will soon have the option of going ad free. For ten dollars a month, subscribers will have the privilege of watching Youtube content without advertiser interruption.
The world’s largest streaming video site unveiled its new subscription program “Youtube Red” yesterday at dual press conferences in New York and San Francisco. According to TheVerge.com, the new program is expected to bring in another billion dollars in revenue for the Google subsidiary.
Youtube Red also marks the company’s first major foray into the business of paid streaming video, a market already dominated by giants like Netflix, Hulu and Amazon Prime.
“I don’t see how they can possibly compete,” said USC Communications professor David Craig about Youtube’s chances against more conventional television streaming services like Netflix and Hulu.
He thinks Youtube is attempting to produce its own TV and film. The move would mark another departure for a site that is synonymous with homemade cat videos and amateur cooking shows with names like “My Drunk Kitchen” and “Epic Meal Time.”
He sees Youtube’s refusal to embrace and manage the thousands of people who post videos to their site as a stumbling block for the success of their subscription program.
“My money’s on failure,” said Craig. “They’re not recognizing the full ecology of what their platform represents.”
The USC campus is home to several Youtube content creators, including freshman Justin Escalona, who runs the channel PlayTheGamesFilms. He has almost 70,000 subscribers and is part of a revenue sharing scheme with Youtube. Notice about the new Red subscriber program reached him late.
“I had no idea about the subscription service,” said Escalona. “I don’t have any background knowledge.”
While Escalona makes money off of the ads that run before his video, he says that he gets more money from featuring products and services within his videos.
“The main money I’ve made is from sponsorships that are integrated within the video,” Escalona said. “A lot of the money you make isn’t from ads placed in front of your videos.”
The practice is called “influencer marketing.” The premise is that individuals with high levels of social prestige can be used to sell products to others within their social network. Influence marketing has let Youtube content creators make advertising deals with companies independent of Youtube itself.
Professor Craig, however, believes that Youtube Red may complicate these arrangements.
“This sort of play is not going to be viable on this new subscription platform,” said Craig. “This is a real issue, it could seriously cripple the content creators.”
