Can YouTube’s premium channels compete with… YouTube?

An item last week in the always-excellent 10,000 Words blog outlined why Reuters and the Wall Street Journal were parting company with YouTube. You may remember that — only a year ago — both companies trumpeted their selection to produce content for a YouTube channel, one of 100 premium channels the Google-owned web video giant spent $150 million to launch last year.

YouTubeSo what went wrong? One place to start, 10,000 Words points out, is the money that YouTube pays for traffic to its channels. They cite an article by Peter Kafka in All Things D, that claims YouTube takes 45% of all ad revenue as its cut, leaving the content producers with revenue of only about $2.50 for every thousand viewers. Yep, that would be $2,500 if your video gets one million views.

Or, to parse the data another way, assume a staffer makes $65,000 a year, which translates neatly to $1,200 per week or $250 per day. Just to earn back their daily salary, that video producer is going to need to produce content every day that reaches 100,000 eyeballs (at YouTube’s rate of $2.50 per thousand eyeballs). Assuming you have multiple staffers on your team, EVERY ONE OF THEM is going to need to produce a video that hits that 100,000 views mark every day.

How likely is that? 10,000 Words points out that a recent highly-trafficked New York Times video netted 330,000 viewers — not per day, but in total.

We’re off here by a factor of at least 10 and that’s what keeps me worried about the future of commercially successful video on the web. And that’s now — before the floodgates open and we see a surge of user-generated streaming video from the likes of UStream and Google Glasses, all free and all competing for those same limited eyeballs.

I don’t want to end on a dour note, so in fairness, I should point out this story about a spiffy new video production facility YouTube just launched in Los Angeles called “Space.” It’s state-of-the-art with green screens and cool camera and editing gear — and it is available for free to folks YouTube allows in to produce premium video content. The goal, according to YouTube, is to give new producers access to better gear so their productions will look more polished. If the cost of producing content were the major roadblock to producing commercially successful content on the Web, I’d say this is a great idea. But it’s not. A couple of HD cameras and a laptop with editing software are within the reach of most wannabe producers, particularly if a few friends pool their resources.

Nope, the enemy of commercial web content is free web content. And who is the biggest purveyor of that in the land? Ironically, in light of this latest venture, it’s the folks at YouTube.

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