Google's YouTube Signs Up Everyone but TV for New Paid Service

Time to Test the Notion That YouTube Stars Are as Valuable as Hollywood's

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Google's YouTube, which has signed up partners for a new paid video service, may find out by early next year whether its own internet stars really are as valuable as those in Hollywood.

Partners accounting for more than 90% of YouTube viewing have signed on to the paid service, the company said in a statement. While the lineup incudes home-grown celebrities and music videos,YouTube so far doesn't have TV networks such as Fox, NBC and CBS, according to people with knowledge of the matter who asked not to be identified discussing the project.

TV staples like Fox's "Futurama," NBC's "Parks & Recreation" and CBS's "Under the Dome" are a featured part of competing products from Netflix and Amazon. Without shows like those, YouTube's commercial-free service will have to attract paying viewers with original series, music videos and thousands of its channels already available for free.

"We are progressing according to plan," YouTube said. "We have support from the overwhelming majority of our partners, with well over 90% of YouTube watchtime covered by agreements, and more in the pipeline about to close."

The networks still have time to sign up. YouTube, has targeted a roll-out of the paid service by the end of the year, people with knowledge of the matter said in April.

The company has advised partners like top draw PewDiePie that their clips won't be allowed to remain on the public, ad-supported YouTube if they don't also sign up for the commercial-free subscription version. (Holdouts can keep videos hosted privately on YouTube, allowing them to become public once a deal is reached.)

Music videos
Some big media companies, including Fox and NBC Universal, are reluctant to make their biggest shows part of the paid service, because they view YouTube as a promotional outlet -- a place for airing clips and highlights -- and because they may not have the rights, which vary by show.

Music is still the most popular type of video on YouTube, and the company may fold Music Key, a paid service it created last year, into the new offering, according to another person familiar with the matter who also asked not to be identified.

YouTube will introduce two new features to convince people to pay for the commercial-free service. Subscribers will be able to store and watch videos without an internet connection, and while using other applications on a mobile phone or tablet, people with knowledge of the matter said in April. Neither of those are available to users of the free service.

Google's video division said last year it would fund a number of original series, and has made deals with key partners like Fine Brothers Entertainment and Joey Graceffa, which already attract millions of viewers.

Original shows
That effort could amount to more than a dozen original series next year, with budgets ranging from a few hundred thousand dollars to as much as $5 million, according to producers who also asked not to be named discussing private financial matters.

Many of the shows will only be available to paying subscribers, the people said.

Subscriptions will generate additional revenue for Google, as well as enrich partners that have been targeted by rivals such as Facebook and Vessel's new video service.

TV networks barely register among the most-watched entertainers on YouTube. They use the website to market programs rather than air original episodes, and have their own online services, including Hulu. They also license programs to cable-TV, broadcast and online partners.

With multiple deals in place already, it's unclear if the companies have the rights to offer videos via a paid YouTube service, several of the people said.

"The Ellen DeGeneres Show," at No. 14, and "The Tonight Show Starring Jimmy Fallon" ranked 46, are the only two network programs among the 50 most-watched on Youtube, according to VidStatsX.

~ Bloomberg News ~