YouTube Subscriptions Are Shifting Media Power Structure
The Promise of Web Advertising Has Yet to Deliver for Big Media
While Big Media remains stronger than ever, Apple’s iTunes and now YouTube have created the marketplace for micro-content. In music, digital singles have changed the dynamics and economics of the industry. Back in the day, an artist would release an album with two, maybe three standout tracks, and then fill out the rest with sub-par, mediocre songs. Consumers paid $10 for that album. Today, consumers are just as likely to pay $1 per single – or to listen to it for free on YouTube. In the latter, advertising becomes an incremental revenue stream. It’s important to note that MTV never paid the labels to license the music videos or share ad revenues. In theory, that forces all new songs to be great (yes, I know, that’s the theory).
Online advertising represents secondary revenue streams to subscriptions and licenses (i.e. Netflix, Amazon etc.) While announcing record profits, CBS’ Les Moonves recently confessed that licensing from web platforms has radically changed the company’s prospects.
Meanwhile new media players live and die off online advertising. While a vocal minority complains about YouTube’s economics, the reality is that YouTube is the best platform to monetize videos due to its scale.
Forget follow me! Subscribe!
Without a doubt, the main revenue driver for text content publishers remains the pageview, and analogously, video producers are focused to augment video views. But whereas a value driver of publishers was the “unique user,” a case could certainly be made that the subscriber is becoming more the important value driver for producers, provided of course that the followers are active and engaged. Indeed, once a producers have built a large enough audience and subscriber base, their validation comes from their ability to build secondary channels and drive subscriptions and views to those additional channels.
During YouTube’s early days, we saw some channels get promoted heavily by YouTube’s algorithms. These managed to build up their subscriptions early on. Some of those channels kept growing subscribers, while others did not.
Not all subscribers are created equally
Admittedly, subscriber count may be misleading. After all, some channels produced one kind of content while curating popular music videos and film trailers. Over time, these promotional clips outdrew the channels’ proprietary content, making the channels less valuable over time (i.e. if the subscribers aren’t there for your content, but something else, the subscribers almost become a liability, instead of an asset).
Times they change
It’s also worth stressing that YouTube is now eight years old! Many of the site’s early users who signed up as young teenagers are young adults. Maybe, in hindsight, that subscription to Fred’s channel doesn’t seem so wise. So unlike that pesky magazine subscription that is never easy to cancel or give up, or that cord you always plan on cutting, YouTube subscriptions are very fluid, which bring pros and cons.
One great thing for viewers is that that fluidity forces producers to constantly improve and update with better content. After all, the best and worst part of YouTube is that you are only as good (or bad) as your latest video.