
The pressure on the traditional Cable TV business model is mounting!
According to AdAge, YouTube is set to introduce paid subscriptions this spring.
It doesn’t mean that YouTube stops its main attraction: the free videos, but it does mean that they make another interesting move challenging the existing cable TV setup.
The revenues from the type of service, YouTube plans to offer, will flow into a completely different business model than an existing cable TV setup. For consumers, the YouTube and Internet TV business model is attractive because it relies on low prices (It is expected that YouTube will charge between 1 and 5 dollars per channel) combined with a-la-carte choice of channels and possible subscriptions to content libraries.
To put the potential challenge of this business case into a perspective:
Consider if the TV business model undergoes the same changes as the music industry, where paid music has moved from CDs to download to streaming. Today you can subscribe to Spotify and get one month worth of streaming for the same price as a CD or a few downloads on ITunes. The changes are enabled by internet technology and changes to the payment to the artist. According to a recent NYT article, the move from download to streaming means lowering royalties from cents to fractions of a cent for the artist.
The level of royalties in the music video streaming is illustrated by Psy’s viral video hit “Gangnam Style” which according to Google generated $8 million on YouTube and was watched 1.2 billion times. This actually means revenues is less than one cent per view.
So where does this all take us. Clearly the TV business will change and it will take time, but the consumer demand for lower prices and a-la-cart choice is strong and internet technology is rapidly evolving. So what do you say, when is TV is going Gangnam Style?
According to AdAge, YouTube is set to introduce paid subscriptions this spring.
It doesn’t mean that YouTube stops its main attraction: the free videos, but it does mean that they make another interesting move challenging the existing cable TV setup.
The revenues from the type of service, YouTube plans to offer, will flow into a completely different business model than an existing cable TV setup. For consumers, the YouTube and Internet TV business model is attractive because it relies on low prices (It is expected that YouTube will charge between 1 and 5 dollars per channel) combined with a-la-carte choice of channels and possible subscriptions to content libraries.
To put the potential challenge of this business case into a perspective:
Consider if the TV business model undergoes the same changes as the music industry, where paid music has moved from CDs to download to streaming. Today you can subscribe to Spotify and get one month worth of streaming for the same price as a CD or a few downloads on ITunes. The changes are enabled by internet technology and changes to the payment to the artist. According to a recent NYT article, the move from download to streaming means lowering royalties from cents to fractions of a cent for the artist.
The level of royalties in the music video streaming is illustrated by Psy’s viral video hit “Gangnam Style” which according to Google generated $8 million on YouTube and was watched 1.2 billion times. This actually means revenues is less than one cent per view.
So where does this all take us. Clearly the TV business will change and it will take time, but the consumer demand for lower prices and a-la-cart choice is strong and internet technology is rapidly evolving. So what do you say, when is TV is going Gangnam Style?