YouTube introduced professional channels — an initiative to add original content to the Web’s top video site — back in December 2011, after an investment of $100 million; but the fresh money will only be seen by 30 to 40 percent of its 100 plus channel partners, which were recruited to make the service more TV-like and competitive against video-on-demand (VoD) services.
The money is, as it was last year, not a free lunch since it is essentially an upfront payment of one year of advertising revenues. Each producer must earn the money back via ads attached to their content before they can make additional revenue from the service. For example, $1 million comes it at 50 million views on a $20 CPM (cost per mil/thousand) – fairly high stakes.
Netflix recently announced Q3 revenues of $905 million and the US firm expects to make $400 million of operating income this year after covering its global operating expenses. Amazon, which owns UK Netflix competitor LoveFilm, is also in the game and is trialing an $8 per month subscription for its Prime service.
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