YouTube, the world's largest online video portal, will start charging viewers for some programs, with partners such as Sesame Street, Magnolia Pictures and the Young Turks offering monthly subscriptions, the company announced on Thursday.
The Google-owned video portal unveiled the new pilot program on Thursday, confirming months of reports that YouTube would introduce paid subscriptions. YouTube will also continue to offer free video content to its 1 billion monthly users.
The program launches with 30 partners, but YouTube will soon open it up to other "qualifying partners" who want to opt in. Channels will offer a 14-day free trial before charging, with prices starting at $0.99 a month. YouTube told reporters on Thursday the average price was now around $2.99 a month.
Among those in the entertainment space joining the program is the independent movie distributor Cinedigm, and Gravitas, an on-demand independent film distributor. Cinedigm will be charing $2.99 per month for its channel Docudrama, which springs from its acquisition of New Video.
The decision to charge users marks a major inflection point for the company, which has been a free service since its birth in 2005. Parent company Google has long advocated a free and open Internet, and has frequently locked horns with movie and TV studios and record labels eager to protect the value of their copyrighted content.
But the move on Thursday suggests that YouTube is offering an olive branch to the companies that create premium content, and who have avoided the video platform. The new model attracted partnerships with Sesame Street, the Jim Henson Company and the Ultimate Fighting Championship. Sesame Street will offer full episodes on its paid channel and the Ultimate Fighting Champsionship will offer full fights.
A paid model is also likely to appeal to to stars and production companies who have yet to turn their massive audiences into significant profit. YouTube takes a large percentage of advertising revenue, which until now was the only revenue stream from YouTube.
Many stars have built businesses by selling merchandise and licensing their shows overseas, but the ability to charge viewers establishes a second revenue stream native to the massive video portal. YouTube will still take 45 percent of the subscription revenue, the same cut it takes from advertising.
Most of the paid channels will not feature advertising, Malik Ducard, YouTube's director of content partnerships, told reporters during a briefing on Thursday.
"Today, there are more than one million channels generating revenue on YouTube, and one of the most frequent requests we hear from these creators behind them is for more flexibility in monetizing and distributing content," the company wrote in a blog post. "We’ve been working on that and wanted to fill you in on what to expect."
YouTube will roll out paid subscriptions slowly, an early test of customers' willingness to pay for what was previously free. The vast majority of channels will remain free, and the new plan does not enable just anyone to charge.
"The channels we are launching with are channels we believe we can market and promote, channels that have audience already on YouTube or other platforms," Ducard said. "It made sense to launch with those that can harness their footprint and audience on the free, ad-supported to help people discover pay channels."
Still, only a select few of the intial 30 partners are househould names on or off YouTube. None of the major paid channels come from major media companies like News Corp., owner of Fox, or Disney. Moreover, few of YouTube's most prominent existing partners, from networks like Machinima and Maker Studios to popular talent like Philip DeFranco and Freddie Wong, opted in.
YouTube will launch this program in 10 countries, and the partners can choose how many of those they want to make their channels live in.
All of the new paid channels can be found here, while the full list of partners is below:
Baby First TV
HD Net LLC
Here Media Inc
Nelvana Enterprises Inc
New Video Group
Out TV Canada
Prime Zone Sports
Jim Henson Company
The Laugh Factory
The Young Turks
TN Marketing LLC