Why Premium Youtube and News Don’t Mix

On the surface, it’s been a huge year for Youtube and its string of premium content providers. The website is becoming bigger, and has recently acquired startup Epoxy to help developers and distributors get their work on the site faster and more frequently. In addition to the rise in Youtube developers like Maker Studios  and Machinima, new premium channels are popping up left and right — fashion and lifestyle network StyleHaul netted $4.4. million in Series A funding this February, and Demand Media’s newcomer Tastemade plans to do the same for food.

But news companies aren’t clamoring to take part in Youtube. In fact, the video company endured a messy breakup last month with Reuters and Wall Street Journal, pulling millions of dollars in funding and laying off more than a dozen contractors in the process. To put it simply: premium Youtube ventures and news do not mix.

The easiest way to understand the problems between the two is to follow the money — and, according to Peter Kafka of All Things D, the money flow between Youtube and its premium distributors is shaky at best:

“But many big publishers say that after YouTube takes its 45 percent cut of the ads it sells, they frequently end up keeping about $2.50 for every 1,000 views their clips generate — that is, if their video generates a million views, they get $2,500.”

When you crunch the numbers, it’s easy to see why the much-heralded partnership between Reuters, WSJ and Youtube fell apart unceremoniously. A highly successful Youtube channel looks much like the one run by vlogging sensation Jenna “Marbles” Mourey: with 7 million subscribers to her channel, Mourey, on average, receives roughly 3 million views per video per week. Quick math with that formula of $2500 per million views indicates that she receives$7,500 per week — more than enough to fund a few people but not sustainable for a working newsroom of a dozen dedicated contractors.

The most disconcerting part is that Mourey represents the highest echelon of Youtube success. When examining the (non-premium) channel for the New York Times, the company has a fraction of Mourey’s following: the channel has roughly 215,700 subscribers, and a recent high-view video netted 330,000 pairs of eyeballs. Youtube rarely considers partnerships that have such low numbers, but even if it did, the Times would have received only $982 for the last week’s videos upon application of the same formula.

As Google and Youtube continue to solve the ad monetization problem for videos on the Internet, there’s a hope that these rates will stabilize and become more beneficial to developers of all sizes. But, for now, it’s clear that publishers are much better off hosting their own ad-supported video, rather than resting on the back of Youtube’s premium program.

What do you think of Youtube’s money problem? Let us know in the comments.