Amazon Offers Video Posting Service in Challenge to YouTube

Content Producers Can Earn Money From Advertising, Royalties

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Amazon.com will let people post videos to its website and earn money from advertising, royalties and other sources, putting the company in more-direct competition with Google's YouTube.

Amazon already offers movies and television programs over the internet -- including its own original productions -- to compete with Netflix. The new product will let Amazon give consumers more options about what to watch without an upfront fee because many of those posting videos will be paid based on how their content performs. Competing streaming services have been driving up the cost of this material.

The company used a similar strategy to boost its inventory of electronic books through Kindle Direct Publishing, which lets authors bypass traditional publishers and reach readers directly by posting and selling their own e-books online.

The e-commerce giant said the service is designed for "professional video producers," but its only requirements are that the videos be high definition and have closed-captioning for the hearing impaired.

Amazon is late in challenging YouTube, which has over 1 billion viewers who help it generate billions of dollars a year in advertising revenue and create internet sensations such as PewDiePie. YouTube is looking to diversify its revenue with a subscription TV offering Unplugged that could debut next year.

Amazon has "tens of millions" of Amazon Prime members who get video streaming as part of their shopping and free-shipping subscriptions. Amazon sees video as a way to attract new customers and retain existing ones.

The companies are fighting for the eyeballs of cord cutters, those who cancel cable television subscriptions in favor of video streaming options, and those who never subscribed to cable at all.

The new Amazon service gives video producers many ways to get paid. They can sell or rent their programs on Amazon, or make videos available to all Amazon customers (not just Prime subscribers) in an advertising-supported format. Another option: Provide videos to Amazon Prime members and get royalty payments based on how many times the content is streamed, or as part of an add-on subscription.

Amazon will also distribute $1 million a month to the makers of the 100 most popular programs viewed by Prime members each month.

Partners include Conde Nast Entertainment, HowStuffWorks, Samuel Goldwyn Films and Pro Guitar Lessons. Content from these providers can be found now on Amazon Video. HowStuffWorks posts videos regularly on YouTube and has more than 450,000 people who follow its channel on the video site.

Amazon is also dueling with YouTube over video-game streaming. Amazon purchased the live-streaming site Twitch for about $1 billion in 2014. Twitch focuses on live broadcasts, letting viewers interact with broadcasters in chat rooms in real time. YouTube offers on-demand access to uploaded videos. The two platforms are converging, with YouTube adding live functions and Twitch letting broadcasters upload previous episodes to their channels.

-- Bloomberg News