YOUTUBE: TIME TO CHARGE USERS?
Over the years Youtube, the online video sharing website, has grown in popularity serving viewers all over the world with a large variety of content, from user generated videos to more premium content offered on an array of channels. Currently Youtube generates its revenue from advertising, in the form of ads on the websites homepage, in-video ads as well as sponsored videos and links (Elberse & Gupta, 2010). While this business model has allowed the company to grow and prosper since its inception in 2005, in order for the website to monetize its videos, a new strategy which sees users paying a subscription fee for access to premium content should be considered.
In order to allow Youtube to start charging its viewers, the company should select a small number of popular channels with large audiences that it can start charging a monthly subscription fee for. As content is key, viewers who have been tuning in to high-quality programs on specific channels such as Machinima and Maker Studios, are more likely to want to continue watching these videos despite having to pay a small monthly fee. By generating a second revenue stream through subscription fees, these channels will be able to use part of that money to create more content or increase production quality of their current programming. This new business model can also start to attract professional content providers to partner with the website knowing that they can profit from both ad revenue and subscription fees.
One of the largest problems Youtube faces when it comes to advertising is that brands can be unwilling to place advertisements next to video content which violates copyright laws or is deemed as controversial (Elberse & Gupta, 2010). Advertisers are also less inclined to associate their brand with user-generated content that is usually low in production value and can lack viewership. However through a subscription payment model, advertisers can now be...
References: Elberse, A. & Gupta, S. (2010) Youtube: Time to Charge Users? [Case Study] Boston: Harvard Business Publishing.
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