Content creators will likely receive less than 30% of any subscription dollars flowing to YouTube via a subscription plan that the Silicon Valley company will launch in the coming weeks, according to an executive familiar with the product.
YouTube last year announced it would develop a subscription model for a tier of premium channels, some of which are operated by major media companies such as NBC Entertainment, Universal Music and Warner Music. The Financial Times on Monday reported that YouTube is planning to charge $1.99 a month per channel for about 50 partner channels, and that a launch could be as early as this week.
“We have nothing to announce at this time, but we’re looking into creating a subscription platform that could bring even more great content to YouTube for our users to enjoy and provide our partners with another vehicle to generate revenue from their content, beyond the rental and ad-supported models we offer,” YouTube said in a statement. The company declined to elaborate further.
The company has started to communicate its subscription plan with its channel partners, but a source tells Billboard that a launch is unlikely this week as the company is still finalizing deals with content companies.
“YouTube is in complete control” of the product, and channels can choose whether they will participate but cannot determine how much viewers will pay, the executive said. The amount of revenue shared with content creators will vary depending on the deals each negotiates with YouTube, but is likely to amount to “less than 30%.” Channels will also continue to make money on the premium advertising displayed on their videos; subscriptions will simply add an additional revenue stream.
For content creators, the calculus for whether they should become a subscription channel or remain free depends on how much money they stand to make from subscriptions versus how much they could lose if their audience size drops as a result of being behind a paywall.
For a younger generation, YouTube has been the go-to destination for much of their linear entertainment. YouTube, in a report released in March, defined the bulk of its audience of over 1 billion viewers as “Generation C,” driving an estimated $500 billion in spending. By switching on a subscription layer, YouTube is pursuing its own version of the cable TV model, with dual revenue streams.