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YouTube's $350 Million Original Content Venture Will Renew Only 40% of Channels

11.12.12 @ 2:49PM Tags : , , ,

Depending on how much time you spend on or around YouTube, you may already be aware of the site’s original channels venture – which is not to be confused with its partnering program, a far easier monetization leap to make for the everyday user with a high-traffic upload. Interchangeably called ‘YouTube original’ or ‘premium’ channels (but not like cable TV premium channels — they mean quality of content, not ticket price), the venture was announced about a year ago and launched just this past January. Unfortunately, the returns so far have been pretty lackluster. Now, YouTube is certainly not giving up on what seems to have been an overall rough turnout —  they are, however, seriously cutting back numbers on partner renewals.


Now it’s no secret there’s a certain… vacuum, let’s say, between YouTube’s ceiling — they do, after all, offer the option to upload and view in 4K — and the more sketchy offerings content-wise. Of course, I think this is the beauty of an industry-leading populist tool. Make all the jokes about watching cat videos in 4K that you like (and trust me, I have), YouTube certainly has the weight to throw around to be a serious contender in online content delivery, and the original channel plan made it clear that this is a pursuit the company is taking very seriously. I mean, very seriously — all told, the program’s first round (from January until the very recent contract renewal period) cost $350 million dollars, at least $200 million of which went to marketing alone, and produced almost 100 such channels. Many of of the channels chosen were controlled by known commodities, such as Jay Z:

The idea came to YouTube in the form of Robert Kyncl, former executive at Netflix and presently Google’s VP of Content Partnerships. Apparently, the whole plan is his vision — and in it, he sees advertisers paying to be attached to relevant, high-quality, and high-traffic (ideally) material, not to mention sharpening of regional targeting. The business model employed here is interesting, because YouTube apparently paid hand-selected partners up to $5 million in advances to produce quality content, with return-investment stipulations and one-year YouTube exclusivity in exchange for their chance to shine. Additionally, as part of the program, partners are offered something called “revenue predictability,” which basically means content providers are being paid even if they’re not bringing in any money, in the shared hope that in the meantime they can bring their content up to speed.

So, how has it all turned out so far? Given that YouTube has never tried doing anything close to this before — nor, if I’m not mistaken, spent anywhere near this much money on any single of its ventures, either — the results are pretty disappointing, but maybe not completely shocking. Apparently YouTube will only be giving 40% of its current partners a renewed contract for a second shot. This doesn’t mean they’re necessarily going to under-stock the total number of production groups to partner with (though I’d bet my bottom dollar this will be the case), more so just that a great percentage of first-timers just didn’t make the cut or pull the numbers in the time they had. Google hasn’t broken even by any means, but the company doesn’t seem to mind continuing to muscle forward until the figures start going green — instead, it’s thinking of things in the long-run.

As for lessons learned, Kyncl had this to say to All Things D:

Lesson one: Audience development is equally as important as great content. By creating fantastic content and spending zero time on audience development, you are certain that you will not succeed on YouTube. You have to focus on audience development as much as you focus on creating content… I’m talking about sustained success. Everybody can have a viral success. You find something unique, that can happen. But what we want is for people to repeat things over and over and build great brands. And for that, you need to work with audience development.

This should sound pretty familiar to those of us who have high hopes for the future of internet-based distribution for our work. I think YouTube as a media ecology is an interesting case because of the amount of potential there to really strike gold — I mean, we’re talking 500 million unique visitors a month — then again, with upwards of 75 hours of material uploaded every minute, it becomes all the more difficult to not get drowned out by the crowd. This is of course why finding a loyal audience is really imperative, and we’ll have to see what YouTube does next in helping to assure their partners the ability to do so.

Do you guys think that, given a bit more time, YouTube original channels can be a viable alternative (or at least addition) to existing media pathways? Do you think it will be able to consistently provide high-quality original content on par with the competition?

Links:

[via The Verge & All Things D]

COMMENT POLICY

We’re all here for the same reason: to better ourselves as writers, directors, cinematographers, producers, photographers... whatever our creative pursuit. Criticism is valuable as long as it is constructive, but personal attacks are grounds for deletion; you don't have to agree with us to learn something. We’re all here to help each other, so thank you for adding to the conversation!

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  • Yes! I think this model, in some form, is the future of entertainment. It’s a good start but YouTube needs to do a better job of marketing this “premium” content. I’m talking about something drastic too, like moving all non premium stuff away from the “YouTube” url and having that site be home to the premium stuff. I’m not web savvy, so maybe that’s not even possible, but it’s going to take something along those lines to set up a clear line between what’s premium content and what is YouTube.

  • I agree with Luke… To an average user, finding the premium content might be difficult. Most of the time people have sift through a lot of the junk to get good stuff.

  • Youtube should remain for the common user…. hence “you” tube. And the premium content should get a newer-better-shinier branding.

  • I kinda agree with the above comments. However, I don’t think it takes a new site for this to work. It’s pretty simple really. Change the home page. At the moment it’s just your subscriptions and recommendations. I feel the home page can work to show premium content and your subscriptions. Hulu has a layout that does this (showing the most popular shows etc.) Netflix on my PS3 had a big banner of a Netflix original show then under it was my instant queue. I clicked on the show because it caught my eye.

    I think it’s just about bringing awareness to the premium stuff. If it was a separate site they’ll be tossing away their audience. People go to youtube so now make it so when they go there they see the stuff they expect (subs videos) but also high quality premium videos.

    I also suspect some users will be willing to let ads for the premium stuff to play before their videos if you make it worth their while.

  • If I were YouTube, and I were seriously exploring this avenue, then I’d set up a production company to make some legit content (drama/reality/lifestyle – aka “premium content”) in all the major market places on all the major networks to start to make people associate the YouTube brand with legit broadcast content as well as cat videos.

    Essentially, it’s just a case of taking this premium content that they’re already paying for, and playing it to the masses through traditional means, with a tease of BTS or part 2 available online.

  • The alleged “premium” content was just plain shite. It just goes to show that marketing is no replacement for entertainment value.
    Trying to make youtube more about premium content would kill it stone dead.
    Bizarre as it may seem, people like the yogscast – who easily get 1 million views in a day – are the future for youtube.

    • No matter how well-produced, well-written, well-funded or well-cast this premium content may be, the top video on any given day is either a Justin Bieber music video or a kitten playing piano. How can anyone beat that?

    • thadon calico on 11.13.12 @ 2:20AM

      to filmmakers constantly in their little bubble, the “well-produced, well-written” content that adheres to all the restrictions and confines of what defines a good image / film, may appeal to the film community…but entertainment is not solely about your art form hence youtube is not “FILM-MAKER-TUBE” and in such a democratic environment like youtube, we see that the forced conventions of filmmaking does not hold up with simple and genuine cat coughing videos (i am yet to see a cat cough) …its great to see videos that challenge the archaic art form that i belong to called film making with rigid composition and writing structures…..the reason “reality shows” r becoming more popular on tv and kicking out the fictional series is that most peeps can relate to that “realness” more than they can with the contrived shit my fellow filmmakers constantly put up be it on the big screen or vimeo….its all the same shit kinda like music industry….the music industry is a pointer for the film industry and the jig is up, visual entertainment is not limited to fiction, but a cat doing silly / cute things is more entertaining than your most of my fellow filmmakers contrived art form.

      THIS IS MORE INTRIGUING THAN MAJORITY OF THE INDIE FILM FESTIVAL CONTENT http://youtu.be/SKRgktzRvZ0 WITHOUT THE FANCY CAMERA WORK / PIXEL PEEPING (fucking pixel peeping digi-”Toms”)

      my dear filmmakers, our industry needs to be revamped or its going down the drain like the music industry, it lies in our youth not the adults or legends, they typically know it all “experience is the blah blah blah” they’ll be gone tomorrow, we have to merge platforms and create the new standards

  • Thadon’s got a point, in a way. 99% of what’s there sucks donkey balls, whether it’s at a film festival, on a network, or original content on YouTube.

  • I think the cat video jokes are part of the problem with people’s conception of Youtube, there’s a ton of great stuff on there, but unfortunately Google has unparalleled engineering chops with questionable marketing strategies. There’s nothing truly terrible in this news, actually encouraging that they’re plugging forward, everyone knows there was no chance of the initial slate being 100% successful but I do agree with the comments that there might have to be some sort of walling off of “premium” content to bring it into focus. Nobody I know who isn’t into filmmaking has even heard of these channels so as I believe has been said on this site again, the challenge today for artists isn’t about getting your work produced or released. It’s getting people to actually watch it. I think it should be noted that this article didn’t mention it but Google didn’t base their decisions strictly on page views, but rather how long people actually watched the videos.

  • I find myself constantly punk’d by YouTube search and it is driven by Google’s sophisticated search algorithms. My problem is the key words used to index the content are pretty much useless when anyone can use the same words to define their content. So most of the jewels are buried very far underground and have to be mined by other people and blogged or otherwise brought to my attention for me to view them. That said, I do browse quite a bit for hidden gems until my patience is exhausted. And not once have I spent time viewing a channel. Video search based on face recognition in the video frame is still sci-fi and Google’s YouTube remains terribly disorganized. If you don’t know the artist or content generator’s name, how can you view her content? If the artist is famous, how many spoofs and knock-offs will the site host?

  • I still don’t see how quality video can be delivered on today’s internet infrastructure. They can’t even recreate 720p content correctly, let alone 4k. It’s compressed all to hell and the ISP’s like Comcast put artificial monthly caps on the amount of downloadable content and bandwidth usage, which stifles the use of the internet for streaming quality video content in the first place. Quality takes a lot of data!

  • Daniel Mimura on 11.21.12 @ 11:31PM

    I think the first step, if they want to be taken “seriously”…is redoing the interface, both for function as well aesthetics.

    I hate having to deal with their interface, as well as either having to log in, or constantly having to reset the video to higher rez every time. It’s always resetting.

    And the damned ads and pop ups…from both them and the way they allow content creators to do it…it’s like a video game—I have to zap the pop ups without clicking the wrong thing and restarting or pausing the video as fast as I can.

    For those reasons and more, I can’t take youtube in any variety seriously.