YouTube's Subscription Service & Terms of Use -- One Major Creator's Opinion

This is a companion piece to my just-posted article titled "YouTube's Second Coming (Its Subscription Service) - What Do Creators Think?"  I am posting this separate largely unedited op-ed piece because I found this particular response from a senior exec at a major MCN/digital-first video company to be thought-provoking (and to communicate the depth of passion this overall issue has provoked by some video creators).  I asked permission to post this exec's thoughts largely intact, so long as I kept them anonymous.  Permission granted -- and anonymity kept.  I know that some may justifiably criticize this approach, but this opinion is real, thoughtful in the issues it raises, does not reflect lone wolf sentiments (although, to be clear, the passion is particularly deep), and is thus, I believe, worth considering in the overall debate.  Certainly, YouTube has increasingly been in the cross-hairs of video creators and the burgeoning field of formidable competitors alike.  But, for the record, I believe all sides should have an opportunity to offer their perspectives -- and I welcome YouTube's response (I know several execs there, and they are good people who are passionate about their mission).  And as several execs from digital-first video companies I asked have acknowledged, YouTube faces increasing formidable competition -- and must respond in some fashion.  I reflected several comments of "understanding" as well in my companion piece.

So, with that, here is this guest post that responds to YouTube's new terms of use for video creators (in connection with the widely reported coming of its new ad-free subscription service) and the reaction to how YouTube communicated it out to them:

"The main question is ... what is this [YouTube subscription service] going to be? YouTube is forcing people to sign this agreement or shut down their channels. They're doing this without even showing a sample of the product. This is not a random occurrence, it's par for the course in terms of how YouTube treats video producers.

YouTube's view of video producers seems to have two main thrusts: 

1. We know what's good for you so do as we say.

2. If you don't like it you can leave, there will always be other video producers ready to take your spot.

This is why every company that relies on YouTube is trying to make YouTube a smaller part of their business from every perspective including technology, access to audience and revenue. In my view, that's a terrible position to be in. Why would a company want to make every business that utilizes them less incentivized to utilize them? It's the arrogance bred from years of dominance and an arrogance that may ultimately be their undoing. 

In regards to paying subscribers ... YouTube's core audience either don't have money to pay a subscription fee (no credit card or parents won't pay for it) or are tech savvy enough to know they can instal an ad blocker and get an ad free service without paying. 

Hulu and Netflix work in part because they cater to adults and children. Every original for the most part is either kids programming or a high end drama intended for adults. There is no originals programming (at least not at the level of either kids or adults) for 13 - 22 year olds. This is YouTube's audience. 

So if YouTube's audience don't/can't pay to get ad free, then the next question is really about the content YouTube is putting exclusively behind the paywall. In some respects this could be great as they seem to want to utilize homegrown talent to drive the majority of this content. This could drive more subscriptions, but this leaves out channels/producers that don't get slugs of this money. YouTube is going to feature their 'originals' behind the pay wall and if viewers do make it to a non-original behind that paywall there's no accounting for what we'll actually get paid and no incentive for YouTube to help us keep people on our content. 

This means video producers without an originals deal from YouTube have zero incentive to push people there and much more incentive to push their audience completely off of YouTube. I'd add to this the split on subscription revenue, which is the same as ad revenue (55/45), is a joke. If we can get a fraction of our users to pay us the subscription directly, plus we get all of their data, why would we as programmers have any interest whatsoever in helping YouTube's subscription model? 

Furthermore, this thing could completely fall apart if the service [isn't compelling]. Google hasn't really dominated anywhere with a new product they haven't bought since Gmail .... Why will this new service be different? 

That being said, will subscriptions make video viewing more convenient for an audience or for video producers? In theory yes, that's the promise. Audiences don't have to watch ads and video producers will get more revenue and have a better direct connection with their fans. However, so many things have to go right for the producer for this model to work on YouTube that the chances of this theory being accurate are extremely low."