YouTube Set to Launch Paid Channels

YouTube is about to launch as many as 50 paid TV channels, the Financial Times reports. Viewers will be able to subscribe to each channel for as little as $1.99 a month.

The immediate financial impact probably will be relatively slight. The longer term implications could be rather large. And no matter what YouTube says, it might indeed be the "next generation of cable TV," though YouTube executives say it is not. 

YouTube is “not a replacement for something that we know. It’s a new thing that we have to think about, to program, to curate and build new platforms," said Eric Schmidt, Google chairman. Granted, YouTube tends to be shared and social, to a greater extent than traditional linear TV. 

But since linear TV is trying hard to become shared and social, it isn't so clear that the actual difference between a smaller TV network appearing on a cable, satellite or telco TV service, and a YouTube paid channel, is truly significant. 

Indeed, as the large video entertainment distributors try to rein in costs and supply lower-cost, more basic programming menus, many of the smaller networks could find they must consider YouTube, Netflix or some other distribution method to get their content to end users. 

In that sense, YouTube conceivably could emerge as a way for smaller networks to build an audience when carriage on the tier-one video services is not possible. The difference between a niche "cable channel" and a niche YouTube channel mostly is the willingness of the network to make YouTube a major distribution channel. 

Also, the "for fee" element creates a revenue model for any niche channel that resembles the affiliate fee payments networks normally are paid by cable, satellite and telco TV providers. 

What YouTube might become is not so clear. What is clear is that, as often is the case, is that a business model will emerge, as much as be built. 

Back in 2011, when YouTube agreed to invest about $100 million in original programming for new "channels," the thinking was that advertising ultimately would provide the revenue. One might argue that the new emphasis on paid channels suggests the ad revenue, though important, is not sufficient to support the sort of original programming that drives viewership.