YouTube starts paid subscription service

Google's YouTube video service is dipping its toe into pay television
by starting on Thursday a subscription service with 30 content
creators, including children's programmers Sesame Street and Muppet
creator The Jim Henson Co, and the Ultimate Fighting Championship.

YouTube,
the world's largest video website, allows creators to set subscription
fees and accept advertisements, at their discretion, for the channels
they create.

For US$4.99 a month, subscribers can get golf
lessons from the PGA Golf Academy. The Laugh Factory charges US$2.99
for clips of stand-up comedy routines and Henson charges US$2.99 for
full length episodes of "Sid The Science Kid" and "Fraggle Rock."

YouTube
has spoken repeatedly about its intent to experiment with paid
channels, and has made no secret about its intent to be a major player
in quality content.

"If feels to me as if history is repeating itself, said Tony Vinciquerra, former chairman of News Corp's Fox Networks Group.

"In
the early '80s cable providers subsidized channels to enhance offerings
to consumers and increase penetration. Fast forward to today, and
YouTube is subsidizing the development of new content offerings."

YouTube
will feature content from traditional TV and film producers, company
executives said, and at the launch featured children's videos from
National Geographic and videos from cable channel HDNet.

That
could eventually be a threat to cable and TV operators, but no time
soon, said Richard Greenfield, a media analyst with BTIG LLC.

"I think everyone who creates video programming should be worried about the growth of new content channels," he said.

"Broadcast TV has been hurt by cable. Broadcast is still a very large business despite fragmentation."

Content
creators will get most of their revenue from subscriptions, as they
already do from advertising on the site, according to company officials.

In
March, YouTube said on its blog that it has more than 1 billion unique
users a month. The new subscription service will be available in 10
countries at launch.

YouTube has spent more than US$100 million
to help about 150 media partners create and promote specialised YouTube
video channels dedicated to topics ranging from food to sports.

"Consumers have gotten used to getting their content on the web," said Laura Martin, senior analyst with Needham and Co.

"The question is whether they will pay for it."-- Reuters