YouTube Premium remains small potatoes for video publishers

Sources did note that YouTube Premium viewership is rising: One source said that views from YouTube Premium rose 80 percent year over year, with revenue growing 120 percent; a second source said it saw 200 percent growth in views. Two other sources declined to share hard numbers, but confirmed that YouTube Premium viewership and revenue had grown in 2018. And yet, sources said YouTube Premium still accounted for an “insignificant” percentage of the money they made from the video streaming platform. Most of the money video publishers make on YouTube still comes from ads.

These signs of progress revive long-standing questions about the ad-free subscription service, which went through a number of dramatic changes in 2018, including a rebrand, a price increase and signals that it would move away from exclusive, subscriber-only content it once framed as one of its chief selling points.

“YouTube has always been trying to do the right thing, from the beginning,” said a source at one video-focused publisher with an average monthly YouTube view count in the nine figures. “It feels like they want to support the people on their platform. It [YouTube Premium] just hasn’t grown much.”

A YouTube spokesperson declined to comment on the balance between subscription and ad-supported revenue it paid out to publishers.

“By any measure, 2018 was a breakout year for YouTube Premium and YouTube Originals,” the YouTube spokesperson wrote in a statement. “We expanded YouTube Premium to 29 countries, launched over 50 scripted and unscripted shows, and collected eight Emmy nominations and over 30 industry awards. We will begin making all of our YouTube Originals ad supported to meet the growing demand of a more global fanbase. This next phase of our Original strategy will expand the reach of our YouTube Original creators, and provide advertisers with incredible content that reaches the YouTube Generation.”

Since it launched its subscription service nearly four years ago as YouTube Red, the streaming giant has never released a subscriber total. In late 2016, one year after YouTube Red launched, The Verge reported YouTube Red had amassed 1.5 million subscribers, with another million using it on a free trial basis.

Throughout its history, YouTube Premium has been dogged by questions about its identity: Is it a home for premium content, or just an ads-free version of its service? Or is it just a dressed up competitor to Spotify? Should I just shell out for YouTube TV, which also offers original programming from YouTube Premium?

More recently, some creators say YouTube has struggled to send clear signals about the kinds of premium programming it wants to make. “From an original programming perspective, there isn’t a clear direction in strategy,” Adam Wescott, a partner and executive producer at Select Management Group, told Digiday late last year.

YouTube monetizes its ad-supported and premium views differently: Ad-supported views are monetized based on cost-per-thousand views, or CPM, sold either through YouTube’s platform or directly by the publisher. YouTube Premium subscription revenue, meanwhile, is paid out based on the percentage of total watch time. YouTube takes a 45 percent cut of both kinds of revenue.

To date, YouTube Premium’s small subscriber base has not offered publishers further clues about what the YouTube Premium audience wants. Publishers get a clear view of what kinds of content regular YouTube viewers and YouTube Premium viewers are watching on their channels. In theory, separated view counts could deliver a valuable signal to publishers: Seeing that hundreds of thousands of YouTube Premium subscribers are watching a certain kind of video every month, for example, could influence programming strategy and create a kind of positive feedback loop, enabling publishers to create more content that generates more revenue than ad-supported content can.

Among the publishers contacted for this story, that volume does not currently exist. One source noted that the revenues generated by YouTube Premium views were low enough that it hadn’t even bothered to figure out which type of view would be more valuable. “The things I focus on most are the things I can have the most influence on,” a source at a third video-focused publisher said.

That lack of signal is frustrating some sources, who say they are more focused on creating content that can be sold to ad-free platforms. “Premium content and premium partnership are what we’re leaning into the most,” said a fourth source.

“The reason we’re focusing on YouTube is not from a revenue standpoint,” that source said. “It’s from a user standpoint.”