YouTube tier talk piques interest

By Nicola Riches and James McGrath | 23 April 2015

YouTube’s unconfirmed subscription tier signals Google’s intention to stride even more boldly into the highly competitive premium content space and put itself alongside TV networks, claim a raft of Australian media buyers.

YouTube has allegedly sent a letter to content owners making reference to “creating a new paid service” and an official launch is expected at YouTube’s annual Brandcast event, as part of IAB’s Digital Content NewFronts in New York on 29 April.

Senior figures predict the subscription offering will give Google a platform to aggressively seek premium deals with content creators, putting it smack in the middle of the content game with other TV and online entertainment networks.

The success of YouTube’s offering would certainly lie in content, rather than any pricing structure, they say.

GroupM chief investment officer Danny Bass, whose company has a deal with Google to represent the most-watched inventory on YouTube through Google Preferred, told AdNews that it was not in YouTube’s best interests to cannibalise its ad-supported offering by solely focusing on a premium tier.

“They’re not going to give Facebook a free kick by going all-out subscription. Google isn’t going to lie down and give Facebook a free ride on TV money,” he said.

He added: "A subscription tier would definitely work in the family entertainment or games area, where engagement is off the charts. YouTube’s global reach means that it has the opportunity to test out these things, but will people pay? And will it befinancially viable for Google? Both of those things remain to be seen.

"After all, one man’s premium content is another man’s rubbish."

Agency figures suggested the introduction of a subscription tier could force YouTube, brands and agencies to reconsider how they present ads on the free version, in a bid to retain eyeballs, but it is unlikely to affect the torrent of revenues which flow from the wider, ad-supported, free-to-access service.

“My feeling is that there’s so much inventory out there that there will still be a fairly sizeable chunk of inventory to play with,” Omnicom CEO Leigh Terry told AdNews.

“It makes sense from their perspective to try and diversify the revenue model, but it’s really early to see whether that will succeed or not,” he warns.

This story first appeared in the 17 April print edition of AdNews. You can subscribe to the magazine here, or get it immediately on iPad here.

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