YouTube is Monetising Fandom Through Subscriptions
YouTube is no stranger to subscription models; it had 53 paid channels in 2013 with monthly subscriptions priced from $0.99-$2.99. Four years later, the paid channels were discontinued with YouTube stating in its blog, “This service offered monthly subscriptions for some channels, but with less than 1% of creators using it today, it never achieved popularity with creators or users”. Focusing on music videos, Music Key was launched in November 2014 as an ad-free subscription service. Less than a year, it relaunched as YouTube Red to include all video genres with a monthly price tag of $9.99. Following its failure to resonate with users, it was rebranded to YouTube Premium in 2018, with a monthly fee of $11.99 and the introduction of YouTube Original videos.
These trials and errors are a reflection of YouTube’s resilience in experimenting with subscription models that can successfully work. After all, YouTube profits from its content creators’ revenue – YouTube receives 30% from Youtubers’ membership revenue. In MIDiA Research’s Q1 Brand Tracker 2019 survey, only a total weighted average of 6% of UK respondents subscribed to YouTube Premium. The introduction of channel memberships could be the end of YouTube’s subscription woes.
Content creators can now offer viewers tiered subscription plans (as many as five) that start from $4.99. Subscription perks would include exclusive live streams, videos, loyalty badges and customised emojis. The creator of “React” channel, Fine Bros Entertainment (FBE), was one of the first to adopt and test this tiered subscription. The React channel offers three tiers of membership. The second tier, Superfam Gold Tier, is priced at $9.99 a month, with benefits of early access to merchandise, additional exclusive content and participation in “What’s on the React” poll. The third tier, Superfam Diamond Tier, is priced at $24.99. Perks for this tier include personalised videos, choosing a topic for an episode and exclusive information on how to get on the show.
With YouTube granting its creators control over membership plans, creators are able to strategically package each tier. After all, creators understand their fans better than anyone else. In order for creators to be eligible for this feature, they need a minimum quota of subscribers (in terms of following). YouTube has quantified fandom as 30,000 subscribers for video channels and 1,000 for gaming channels.
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The lowest subscription price of $4.99 makes it affordable for superfans to pay and exclusively engage with content creators they love. While the higher tiers are pricier ($24.99 is double the amount of YouTube Premium subscription), perks like the opportunity to feature in a React video adds value that should be substantial enough for superfans to pay. YouTube’s chief product officer, Neal Mohan, said in VidCon 2018 keynote that FBE saw membership revenue increase six-fold after introducing the higher-priced tiers. YouTube’s official blog states comedian Mike Falzone revenue has tripled since he started offering the basic membership plan.
Affordability aside, this feature forges closer ties between YouTube celebrities and their fans. Superfans’ loyalty badges will appear on live chats with Youtubers – the sentiment here is the opportunity to engage and stand out in live chats. This feature directly taps into the fan’s hope of being noticed by YouTube celebrities and influencers. YouTubers can now sell their merchandise directly through their channels, and with perks like early access to merchandise for superfans, YouTubers can monetise the fear of missing out. This push to monetise could be perceived as cynically creating the mindset that individuals are only fans if they own at least one item of merchandise. Tapping into such power per-group psychology has led to YouTuber Joshua Slice making over $1 million profit in 18 days through sales of 60,000 soft toys.
While YouTube has not revealed an overall revenue for channel memberships, examples above tell us that this subscription model holds great potential and sustainability. The ability to connect fans and users closely to YouTube celebrities provides an excellent opportunity to monetise fandom. It is about building lasting personal relationships with fans and viewers. People are more inclined to be loyal to brands that care about them; or rather, brands that are loyal to their fans.