YouTube Gears Up for New Premium Channels (But Would You Pay $5 a Month to Watch Them?)


Tollbooths may be coming to YouTube, but don't panic: The freeway should remain open.

AdAge is reporting
that Google (GOOG) is reaching out to some of its more prolific content producers to create premium channels. The first wave of channels would charge viewers between $1 and $5 apiece every month for exclusive content.

Google has tried to turn its popular video website into a commercial platform before. It has offered piecemeal rentals for streams of both indie and major Hollywood films with limited success.

It could be different this time, especially if YouTube is able to round up top entertainment brands or some of its larger channel partners in time for the springtime launch.

More Than 4 Billion (Hours) Served

The push for premium content seems to go against the company's success as a wholly free streaming website. YouTube is now serving more than 4 billion hours of content a month. For those scoring at home, that is four times greater than what premium streaming video leader Netflix (NFLX) is delivering.

Last week's quarterly report also had some interesting nuggets in terms of the success of advertising on YouTube.

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YouTube's 25 largest advertisers are now spending an average of more than $150 million a year on the site. Remember PSY's Gangnam Style video? The infectious South Korean pop video alone has generated more than $8 million in all-in advertising revenue.

The ad-supported YouTube seems to be more than enough to satisfy popular content creators and Google's marketing-magnetic coffers. Shareholders are certainly pleased. Google shares hit a new all-time high late last year.

Diversifying its revenue mix by appealing to steady subscriptions is interesting in theory, but it's certainly not necessary.

The First Class Curtain is a Killer

In the spirit of full disclosure, I've been part of the YouTube Partners program since 2009. My fledgling Moonpies channel has more than 12,000 subscribers and nearly 4 million video views. I didn't receive an invitation to create a premium channel, and I certainly don't expect one. I'm too small. I can't fathom anyone paying for my clips.

However, there are certainly plenty of talented YouTubers out there that would be worth a modest subscription if that was the only way to gain access to their content. Netflix, Hulu, and now even (AMZN) are investing in original programming that premium subscribers can only watch through their platforms. Why can't YouTube join the party?

Unfortunately, there are bigger questions than that which need to be answered: Will YouTube users be turned off by tiered access? Will they flock to smaller streaming sites where all of the content is available for free? Will the content creators generate enough subscription revenue to offset what they would be making through the current ad-supported model?

Obviously Google has thought these questions through if it's going forward with this as reported by AdAge. The only thing that we can now do is watch -- and hope that we don't have to pay for that privilege.

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Motley Fool contributor Rick Aristotle Munarriz owns shares of Netflix, and his YouTube channel has been around since 2006. The Motley Fool recommends, Google, and Netflix. The Motley Fool owns shares of, Google, and Netflix.

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