Will YouTube Charge Users to View New Content?

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Google (NASDAQ: GOOG ) is expected to start charging users to view certain (perhaps all-new) channels on YouTube this week. Will this really happen, or is it just another rumor gone wild? YouTube has been rumored to start charging users to subscribe to certain channels for more than six months. With prices rumored to fall between $0.99 and $4.99, Google hopes that users will be willing to pay for content they may have originally received for free -- or so the rumors claim.

The latest report comes from the Financial Times , whose sources claim that YouTube will charge $1.99 per month and per channel for as many as 50 different channels this week. It is not yet known if these are new or existing channels, but content providers will reportedly use the subscription revenue to produce new TV shows or movies.

While $1.99 may not sound like much to a 12-year-old who cannot live without AwesomenessTV (a successful YouTube channel that was just acquired by DreamWorks Animation (NASDAQ: DWA ) last week), the fees could add up fast.

According to The Hollywood Reporter , YouTube has invested more than $200 million to lure recording artist Jay-Z, actors Ashton Kutcher and Sofia Vergara, and retired basketball star Shaquille O'Neal, among others. With so much money poured into their various content deals, these and other celebrities could be part of the forthcoming subscription option.

Unlike Netflix (NASDAQ: NFLX ) and Hulu, YouTube is not expected to offer a low monthly fee that encompasses all of its videos into one inexpensive package. Instead, YouTube is believed to be creating a service that could become a modern-day Comcast (NASDAQ: CMCSA ).

If the reports are true, Google hopes that users will slowly become comfortable with the idea of paying for YouTube. This may not be the case.

While consumers are typically willing to pay for some forms of entertainment (such as movies when they first arrive in theaters), they are always on the lookout for free alternatives. The music industry knows this better than anyone .

One of the biggest sources of YouTube's success has been its ability for viewers to quickly and easily share videos with each other via links and website embeds. Subscription-based content will eliminate both of these elements and make it much more difficult for content creators to receive millions of views. If YouTube offers a free pass of any kind for those who don't pay (so that embeds are still possible), then no one is going to want to pay.

These are just some of the problems that await YouTube at the launch of its reported subscription-based service.

Louis Bedigian is the Senior Tech Analyst and Features Writer of Benzinga. You can reach him at 248-636-1322 or louis(at)benzingapro(dot)com. Follow him @LouisBedigianBZ

(c) 2013 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Stocks

Referenced Stocks: CMCSA , DWA , GOOG , NFLX

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