We’ve seen a report that suggests YouTube’s new subscription service is struggling to persuade content owners to sign up and the biggest fear is the loss of revenue because of the current YouTube business model. Content creators’ concerns highlight one of Google’s challenges – that of moving away from the existing business model based on advertising revenue and into a subscription based service. The fear is that customers who might have clicked on an advert will now not be shown the advert and a creator’s share of Google’s subscription revenues will not cover the difference. Another concern is that the new model potentially conflicts with other websites and streaming services, such as Hulu and Netflix. Some existing arrangements are exclusive, which either cannot easily be renegotiated or would be extremely expensive to do so.
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We’ve seen reports that Google may be using strong arm tactics to encourage television companies and content providers to adopt the new service. It is claimed that Google will force content providers to either forgo their traditional revenue split from YouTube selling adverts, or they will have to set their channels to private (and this will make them impossible to find through the search). Google has been quiet about how much the video subscription service will cost. However, Music Key – the YouTube subscription service for music videos – has had a difficult start. Music Key remains in an beta stage and faces staunch competition from online music streaming services such as Apple Music and Spotify.
It seems that whilst Google has significant clout, it does not have enough to ensure that a new service is successfully launched. However, we also know that Google does not enter all markets to make a profit but instead to unsettle the establishment. It is not yet clear how far Google has succeeded in obtaining the necessary content for the YouTube subscription service of what changes it may make in its strategy in order to encourage success. This is a developing story and will likely see further updates coming through in due course. Either way though, it seems clear that YouTube and Google have been planning the subscription service for some time. It was in late 2014 that YouTube Chief Executive Officer, Susan Wojcicki started speaking about the new subscription plan.