SINGAPORE: YouTube finally announced that it would
allow channels to charge monthly fees to access content on YouTube and
Forrester analyst James McQuivey explains in his latest blog post how
YouTube is basically making a grab for more of everything that matters:
More business options, more content partners, more satisfying customer
experiences and most importantly, more minutes of our time.
He opines that some have predicted that YouTube's subscription model
would undercut its ad model in an echo of the infamous paywall problem
that has bedeviled online newspapers as they shifted from ad-supported
to paid. "Others have suggested this shows that YouTube is up against an
advertising wall of their own making -- advertisers will only pay so
much to advertise against this amateur and semi-pro content (and to be
fair I am in this camp even though I don't think this fact is dire).
While still others gleefully wait to watch as YouTube learns how hard it
is to get people to pay for things online." he writes.
In fact, all three of these things are minor asides in YouTube's
decision-making, as he sees it. Instead of reacting to these and other
constraints, YouTube is pro-acting on imminent opportunity. YouTube is
basically making a grab for more of everything that matters, he
suggests.
That's where he unveils the area of more business model options. TV
is both ad supported and subscription supported and that works just
fine, he argues. It gives people like HBO the creative flexibility to
generate content advertisers may not be ready for and it gives companies
like Scripps the freedom to promise more home-focused entertainment
that home-focused advertisers care about. That flexibility is crucial to
the ongoing success of those companies and it will be crucial to
YouTube as well.
"Although in YouTube's, case, I would be surprised if the revenue
balance in the one to two-year time-frame exceeded 10 per cent or 15 per
cent subscription to advertising. More content partners. This is the
best gotcha for YouTube. Remember when Viacom sued YouTube? And remember
how other content providers refused to give YouTube content of any
kind, some of them opting to enthusiastically back Hulu for a while as
an alternative to strengthening YouTube? Now professional content
providers that have stayed out of the YouTube fray are entering,
creating channels like National Geographic Kids and Sesame Street. These
companies aren't naïve entrants, either. They know how many millions of
views they already get on YouTube and, like the music business that
ultimately partnered with YouTube to create the online music video
service Vevo, they want to monetize those views more effectively while
simultaneously building a customer relationship with those views.
YouTube smiles all the way to the bank, hand in hand with premium
content partners."
He advises that in the long run, the YouTube experience needs to
create a You Channel, content organized around you as a viewer. Before
it can do that, it has to have the content you want and it has to be
able to deliver that content on all the screens you have in a way that
simplifies the infinite-seeming array of YouTube videos into a compact,
satisfying viewer experience.
"If, by getting people to pay for even a fraction of what they watch
on YouTube, the company convinces us that the content it delivers is
more important than we realized (funny thing about paying for something,
you feel you should use it), then it wins. It does so by getting us to
watch even five more minutes a day, five minutes that come from
somewhere else in our lives whether it's Cut the Rope or HBO or quality
family time. YouTube doesn't care where it comes from, it just wants
more of it. And the flexible subscription model, pushed by each of its
content partners at their own discretion is precisely the way to reach
for it."
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