YouTube to join subscription-based video market

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Since YouTube’s inception, it has been a free video-sharing network enabling anyone with a camera and an internet connection to broadcast video recordings. But the Google-owned website is reportedly launching a paid subscription service in May that will host more content from specialized creators, and possibly propel it into a market with subscription-based streaming video providers.

While YouTube currently offers video content with ad support, all of its content is still free. With 50 future channels rumored to require paid subscriptions, YouTube will be opening the door into the world of the paid video platform — one currently largely dominated by Netflix, Hulu, Amazon, and other popular companies including the controversial Aereo. These video providers have been building up subscriber bases to their offerings of mainstream movies and TV shows — a market YouTube has never been a part of officially. (The network hosts videos of users’ taped programming over which it has faced lawsuits.) This new potential series of paid channels also changes the possible future design of content on YouTube.

With new monetized content, its creators have more at stake. Users are understanding of the amateur, rudimentary two-minute films that populate YouTube because it’s free, but won’t be so complacent when they’re paying for it. YouTube will have to closely monitor the quality of content on its paid section, inherently requiring that it be professional (sort of).

A fee of $1.99 per month has been cited as the initial monthly cost for access to one of 50 channels that will be available, but just because YouTube will start to make money off of its quality content doesn’t mean the network hasn’t been lucrative for videographers already. The rise of the “YouTuber” — a person who makes their living off of creating or producing videos on YouTube — is a phenomenon of the last few years as random users see their video content go viral. The “YouTube sensation” can propel users with various talents they’ve exposed online into full-fledged contracts with music, comedy, or other talent agencies. Whether YouTube will be professionalizing, so to speak, top-level YouTubers, or whether the company will be following the Netflix model and offering more commercial network shows or films is not yet known.

No matter its strategy, YouTube has at least one leg up on the other popular video streaming service providers: its enormous user base. With 1 billion monthly visitors, its potential subscriber base is already vastly larger than that of Netflix, which built its business — currently consisting of about 30 million subscribers — off of its paid service from its outset. Should traditional TV broadcasters be worried too? If Google’s Eric Schmidt is right, it could be too late — the chairman told advertisers on May 1 that the replacement of TV with YouTube has “already happened.” 1 billion users provides a substantial mine for YouTube as it explores the new paid platform scene — a move that could render it a cash cow for Google.