Exclusive: YouTube weighs funding efforts to boost premium content - sources
(Reuters) - YouTube has embarked on a new round of discussions with Hollywood and independent producers to fund premium content, two sources with knowledge of the talks told Reuters, a move that could bolster …
Context & Ripple Effects
This is the second time in under two years YouTube has been reported preparing a big content-spending push — the earlier round was flagged by AdAge in November 2012 (YouTube preps big new round of content investments) — and the Reuters report says the company is again in discussions with Hollywood studios and independent producers to fund premium programming.
The timing matters against the backdrop of two reported shortfalls days before the story: YouTube's stated goal of reaching one billion daily watch-time hours through 2016 was said to be lagging despite approaching 300M viewing hours per day, and its estimated $3.5B revenue for 2013 reportedly fell short of expectations. Premium, professionally made content is the obvious lever on both numbers, and it arrives alongside confirmed moves that show YouTube pushing beyond free UGC — internal testing of a music subscription service and new creator tools unveiled at Vidcon.
First-order effects
- Hollywood studios and independent producers gain a new, deep-pocketed funding source for original programming, directly expanding the buyer pool alongside the subscription streamers already commissioning exclusives.
- If funding converts into exclusive or premium titles, YouTube's advertising partners get brand-safer, longer-watch inventory at a moment when reported watch-time growth was running behind the company's own targets.
Second-order effects
- Rival streaming buyers face added competition for producer attention, putting upward pressure on the licensing and development fees they pay to keep originals off YouTube.
- The independent music-label standoff over the new subscription service — where YouTube confirmed it would block videos from labels that had not signed up — signals the same leverage play extending to rights holders generally, forcing labels and producers to weigh access against terms.
Third-order effects
- A sustained funding program would push YouTube's model from pure ad-supported user-generated video toward a hybrid of free UGC plus paid premium tiers, making platform-funded originals a baseline expectation for any large video service.
- As platforms rather than networks become the primary financiers of programming, producers' bargaining position shifts toward whichever distribution channel controls the audience relationship — accelerating the consolidation of content economics around a handful of tech-owned services.
The trend: Video platforms are moving from aggregating cheap user-generated content to directly financing premium programming as watch-time growth and monetization pressure mount.