With Subscriptions, YouTube Fires Shot Across Cable TV's Bow

With a widely expected announcement to let some YouTube channels charge monthly subscriptions of 99 cents and up, Google is positioning its video site as the anti-cable TV: a video service willing to offer individual channels on the cheap rather than force people to buy huge bundles of channels, most of which they'll never watch.

Unfortunately, YouTube remains the anti-cable TV in another sense: Its subscription offerings include almost nothing you've ever heard of unless you're a pretty avid of specific YouTube channels, or a kid (or have kids). They include Sesame Street, National Geographic Kids, Treehouse Direct, and other kid-oriented fare, plus Ultimate Fighting Championship and other testosterone-fueled shows as well as a scattering of others such as the talk show Young Turks.

That's right, there's nothing from Disney, Comcast /NBCUniversal or any other major media company. And the vast majority of channels will remain free and ad-supported. Fact is, no matter how many channel go paid, advertising will remain far and away YouTube's biggest source of revenues.

But that's OK with YouTube, at least for now. Like all shots across the bow--maybe it's better labeled a trial balloon--this one is not aimed directly at its target. Pay TV is doing just fine, thank you, and no doubt its executives note this development with little more than mild interest.

For its part, Google says it's mostly trying to give its channel partners a way to make money in a different way than simply advertising. From its blog post today:

Starting today, we’re launching a pilot program for a small group of partners that will offer paid channels on YouTube with subscription fees starting at $0.99 per month. Every channel has a 14-day free trial, and many offer discounted yearly rates. For example, Sesame Street will be offering full episodes on their paid channel when it launches. And UFC fans can see classic fights, like a full version of their first event from UFC’s new channel. You might run into more of these channels across YouTube, or look here for a list of pilot channels. Once you subscribe from a computer, you’ll be able to watch paid channels on your computer, phone, tablet and TV, and soon you’ll be able to subscribe to them from more devices.

More paid channels will be announced in coming weeks. If YouTube can get a critical mass of hundreds or even thousands of paid channels--most of which will likely continue to run ads as well--it may well start to offer something resembling a more flexible version of today's pay TV.

Just don't expect a true alternative to cable or even Netflix or Hulu alternative anytime soon. First Google has to prove subscriptions work for viewers, who have become accustomed to going to YouTube precisely to get free video. Then it will likely need to create its own bundles to attract broader audiences and at the same time amass audience segments advertisers will want to reach as well. Finally, it will have to persuade bigger media companies with more mainstream shows--the stuff that will really woo people away from the living-room screen--that they can run their shows on YouTube and make enough to offset whatever they're cannibalizing from pay TV partners.

So you'll have to stay tuned for a long time to come to see if all this comes to pass.

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