3 Reasons Why YouTube Subscriptions Are Terrible [OP-ED]

Having teased with breadcrumbs since last year, the YouTube subscriptions launch is a serious letdown. It’s like the exact opposite of an Apple event — it was just terrible.

After just browsing through the library of content for maybe an hour, I kinda puked a little bit inside my mouth. I thought, “Who comes up with these dumb ideas at YouTube?”

I’m sorry. That was a little harsh. Let me rephrase: Who comes up with all these smart ideas and executes it that dumbly (is that a word?). I was imagining something wonderful … but god … it’s horrendous.

It’s not just at the shallow “look and feel” level, like my designer friend and I were talking about this morning. There are some deep problems at the deep, fundamental levels, outlined below.

Thank God YouTube subscriptions is a pilot program. Or else this article would be titled, “Google+ All Over Again. Or YouTube Merch. Or the 700 Other Launches in the Past Few Years That Seemed to be Great Ideas but Really Weren’t.”

Reason #1: YouTube is not the platform where people expect to buy anything


100% of people who come to YouTube come to the platform to watch and share our beloved cat videos; 0% expect to pay for content. It’s really that simple. I think there was a big billion dollar company called Facebook that tried out the commerce model. Remember Facebook credits? Whatever happened to that?

It’s like going over to your friend’s house for a movie. Your friend says, “For $3.99 a month, you can watch something more premium with me (and maybe he’ll even cook for you)” – it just doesn’t work.

And it doesn’t make sense to compare YouTube with other subscription media giants like Hulu, Netflix, Pandora or Spotify. Think about Hulu Plus. Their proposition wasn’t content itself, but the fact that you were able to watch it on 10 other devices. Same with Spotify, Pandora, etc.

These services have libraries of long-form content that people actually consume already. People were actually paying for convenience under the current subscription models – and for a lot of people, it was a very attractive value proposition – not the content itself. Most of the content on Hulu and Netflix and Pandora and Spotify isn’t exclusive to the platform.

This goes back into a well-accepted theory of media: media hardly replaces media – only the medium of consumption changes. Conversely on YouTube, the content library is … well … just not premium enough. Even Netflix barely came out with three originals, only one of which is an arguable critical success.

So what’s the conclusion? Unless YouTube can start charming owners of similar huge libraries of existing content, subscriptions are a hard sell.

Reason #2: Media’s value is only realized after it’s consumed


Just like anything, people won’t pay for things that don’t provide them value. When I go to buy a fridge, I know the exact value a fridge brings to my life – it freezes all of my Lean Cuisines so I only have to go to the grocery store once a month. Video content is another story.

For video and media alike, the value comes from several factors like how you feel after you watch one episode, what others talk about (the hype), etc. And unlike my Farmville app, you really don’t achieve anything after you’ve consumed it (I at least get coins and utterly useless valuable satisfaction with my Farmville app). For YouTube subscriptions, it’s more of … I’ve watched this, now onto the next episode.

You could argue that Hulu, Netflix, Pandora and Spotify face these consumption challenges, but in actuality they don’t. It’s because the value of the content on there has already been vetted. If 50 Cent or any other artist wanted to put their next hit “B*tches and Hoes Be Up in Dis Club” onto Spotify, you can bet the marketing for that song would already have been done – whether it’d be through record labels, TV networks and shows, etc. Think about the stuff you listen to, or the stuff you watch on these platforms – they’re all content that are in pre-existing channels. It’s content that’s pre-qualified for value.

Consequently, the missing element in this equation is arguably marketing. Without demonstrating value or context, there’s no way content will sell, no matter how good it is. Remember Joshua Bell, the world renowned violinist who played in a DC subway?

When it was over, Furukawa introduced herself to Bell, and tossed in a twenty. Not counting that — it was tainted by recognition — the final haul for his 43 minutes of playing was $32.17. Yes, some people gave pennies.

This is the reason why half the budget of box office movies often goes toward marketing and advertising. Marketing has to play a big part – and YouTubers have enough of a problem figuring out what a network is.

Reason #3: The subscriptions platform doesn’t give creators the proper margins


If marketing plays a big part, commanding a 45% revenue share is absurd. Good for YouTube, bad for creators. I wouldn’t pay my mom, dad, brother, or sister 30% for hosting my content, let alone 45.

iTunes and the App store command a 30% share, which in my opinion is a bargain. Why? Because it has one thing that YouTube doesn’t have – an obscene amount of traffic of people expecting to buy. People come on YouTube to watch “Gangnam Style” and cat videos – not buy mediocre clips of extra and supremely recycled library of content labeled “premium.”

The only reason why YouTube can command such a premium revenue share is because of something I’d like to call the “Doggy Dog Syndrome.” Just like a male dog that gets curious when b*tches are around, Hollywood content owners only know how to do one thing – own content and then stick it in any place that will accept. Revenue share? No problem. It doesn’t cost me anything to stick it in those places. In fact, I get extreme pleasure because you’re helping me make money.

What does this kind of extreme commoditization of content do for the individual creators? Well, it fucks them over. Remember the last time when YouTube started handing out some serious stacks to start “premium channels”? Except they gave it to everyone except YouTubers? Yeah … kinda like that. $10,000 would’ve gone a long way for one YouTube creator. But $5mm went toward funding some mediocre ass channels.

What’s my point?


My point is that YouTube is having the royal fuckup of their lives – a great idea turned upside down by outside interests, crappy market research, and a shallow understanding of the new digital media landscape. Yes, the folks and the executives at YouTube have revenue pressure under investors and things. And the recent talk about the small margins of ad revenues isn’t helping much. But at the end of the day, the secret for YouTube lies in its creator ecosystem – not these “big content” plays.

About the author:

Jimmy Chen is currently jobless. Contact him: j at jimmybook.com

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