YouTube Launches Paid Channels With 'Sesame Street,' 'Young Turks'

Option for Dual Revenue Streams: Subscriptions and Advertising

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YouTube launched its paid channels today with 30 initial partners, allowing creators a business model beyond advertising. Among the first new channels launched today include sports, movies, music, fitness and children's programming. Soon, one channel will launch that has never had advertising: "Sesame Street."

The initiative, an open secret in in the industry, will ultimately be self-serve for YouTube's more than 1 million content partners which will be able to elect to charge a fee starting at 99 cents a month for access. YouTube's head of content partnerships, Malik Ducard said creators could elect to charge subscriptions and to take advertising, but that would be the minority at the outset.

"YouTube shouldn't make the call whether a paid channel has ads or not," he said. "The partners are smarter about their audience and their content than we are."

The paid channels will be available wherever YouTube is, meaning computers, tablets, smartphones and TVs. All channels will have a 14-day free trial and the ability to pay via credit card or Google Wallet.

YouTube has been working on the launch of paid channels for months. The model allows some classes of content that is generally ad free -- like children's programming -- on the platform. Some channels that started out on cable, like Cars.TV and Mark Cuban's HDNet (since relaunched on cable as AXS TV) are launching paid YouTube versions, as are several movie channels, like Big Star Movies, Screampix (horror) and Gravitas Movies.

Subscriptions will add a revenue stream for some creators, though few recognizable names on YouTube were part of the announcement today. One exception is "The Young Turks," which has a successful ad-supported channel with more than 800,000 subscribers. The creators are launching a paid version "with content they would not have been able to do without this business model," Mr. Ducard said.

The revenue split will be similar to advertising, with 55% going to the creator and 45% to YouTube.

Mr. Ducard declined to say if YouTube had any expectations for the number of channels that would launch or their revenue contribution to YouTube. "We look forward to seeing how this great community of creators moves ahead to reach their fan communities," he said.

It's a big experiment with one big unknown: Will anyone pay? Here's a taste of what's on offer, Jim Henson TV's "Fraggle Rock," UFC and "The Kevin Nealon Show" from Laugh Factory VIP.

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