Wednesday, November 14, 2007

YouTube Premium? 11% Say They'd Pay, Could Yield $100m

IBM has released a survey of 2400 consumers, called the End of Advertising Survey, that found that %11 of respondents would pay a small fee to remove advertisements from their online video viewing experience. A YouTube Premium subscription option? It could make sense.

The Context

It's widely believed that the web 2.0 era marked the end of paid content and software - that advertising would now fund all future media if not online activity in general. As online advertising begins to take hold meaningfully, though, some number of people wish they could go back to the good old days of paying a small sum.

This will likely be an even more pertinent question when the wall separating billions in TV advertisement comes down, flooding the world of online video. Online video is already a lot more mainstream than many web-heads admit, and the mainstream is more savvy than we might think. Tivo has been a paradigm changer and I have no doubt that a substantial percentage of people will pay to remove ads in a media future increasingly centered on online video. Give me access to my viewing history, preferences and recommendations and I'll happily pay too. Likewise, some users may be willing to pay for an ad-free publishing platform, increased length limits and higher quality playback. I've long been an advocate for paying for software, but now the 89% of the people who say I'm crazy can know that IBM says I am not alone!

The Money did some math and argues that at $2 per month, or $24.95 per year, 10% of YouTube's 50m unique users per month would equal a $137 million annual revenue stream from subscriptions. We did a little more math over here and found that advertisements, on the other hand, at a very generous rate of $10cpm would equal $38m in annual revenue from those 11% of YouTube's viewers. In other words, if (and this is a big if) all these numbers were correct then YouTube could increase its proffits by $100m annually by offering a premium subscription.

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