YouTube to provide premium content

The amount of advertising revenue from user-generated content is not living up to its’ expectations. As a result, YouTube has stuck partnerships with major Hollywood studios to license premium content. The partners include names such as Sony, CBS, BBC, but also a range of lesser knows studios, such as Shout Factory and the Documentary Channel. Advertisers are less keen to sponsor content from unknown makers and pay more for successful, proven content.

However, the movies will not be hosted on the YouTube service, but users will be redirected to the studios own services, so they maintain control over their content and advertising revenue. YouTube functions as a portal, which has the ability to generate a high amount of traffic to the studios content. A likely deal is a revenue-split between the parties. Parties without their own service will be able to host their content on YouTube and also split advertising revenue. Also, the movies that will be shown are mostly about a decade old. New releases will first be monetised in cinema’s, DVD-sales, TV licensing and other usual revenue streams.

Despite its’ popularity, YouTube has been losing large amounts of money to pay for its’ bandwidth demands. Also, lawsuits are costing the service a considerable amount, since it was (possibly) illegally hosted content, which made the service popular in the first place. With these partnerships, YouTube hopes to be able to compete with services such as Hulu.com or iTunes Store, where premium content is already available to users.

It is interesting to note that Google, YouTube’s owner, is now trying to work with established media companies, instead of fighting them in courts. Has Google become frightened of the increasing amount of lawsuits against intermediaries, in which the courts recently impose criminal rulings? Or are the studios finally learning to innovate?