2:33am

Thu May 9, 2013
All Tech Considered

Consumers Facing Subscription Service Overload Will Only Get More Choices

Originally published on Thu May 9, 2013 3:02 pm

YouTube is expected to announce in the coming days that it will launch paid subscription channels, a first for the online video platform that's been around since 2005. But, with the growing number of subscription services available for entertainment, shopping and news, some consumers say they're reaching digital subscription overload.

Mary Gaughan and her husband get near that point when they think about what movie or TV show they want to watch on free evenings at home. "Where do we get it? We've already paid for these services. Is it [streaming free] or should we get the DVD? It's just like become a headache to me," Gaughan said.

For entertainment, the Gaughans subscribe to Netflix, Amazon Prime and cable TV. For music, they have a Spotify account and occasionally use Pandora and listen to radio. "It's just way too complicated, and I feel like I need a strategy for managing my media consumption," Gaughan said.

When she thinks about all the little fees on her credit card, she just laughs.

Gaughan is 48, married and has two kids. Her aversion to all these online subscriptions could be generational. But 27-year-old Michael Weinberger feels the same way. He maintains subscriptions for Hulu, Netflix, Spotify and a variety of other services. He got rid of cable because of the price, and decided against Amazon Prime because he didn't want additional dings on his credit card.

"I felt that to sign up for another program, which would have ultimately been a fee and probably would have been redundant, I kind of hit a saturation point," Weinberger said.

Forrester media analyst James McQuivey says a lot of professional producers aren't happy with only ad dollars, leading to YouTube's move toward paid subscriptions.

"YouTube is in a revenue problem," says McQuivey. "They are doing a good job getting advertising from the content that is appropriate for advertisers, but it's not enough money for the companies making all of the videos on YouTube, spending what is now millions of dollars."

While McQuivey agrees that YouTube is entering an increasingly crowded market of entertainment subscription services, he says it's actually still early days for consumer subscription choices.

"There is so much new content coming out and so many new ways to watch it that I think consumers are in a relatively extended honeymoon period with the idea of subscription," says McQuivey.

The proof may be in the numbers. Paid subscribers to Hulu doubled in 2012 and hit 4 million last quarter. Netflix is inching up to 30 million paying subscribers. Since launching in the U.S. about 18 months ago, the music service Spotify has picked up more than a million paying customers.

As the number of separate services increases, it's likely to open the door to a new business — new tools or services that help consumers organize all those subscriptions and make it easier to find what they want.

Copyright 2013 NPR. To see more, visit http://www.npr.org/.

Transcript

DAVID GREENE, HOST:

YouTube is expected to announce its plan for paid subscription channels this week. Now, don't worry, cat and laughing baby videos will still be free. Many people are already juggling subscriptions for services like Netflix, Hulu and Amazon. Music lovers have Pandora and Spotify. Everyone is hoping that at least one of these subscriptions will give them access to whatever they want to watch or listen to. But NPR's Laura Sydell wonders if some people might reach the point of entertainment subscription overload.

LAURA SYDELL, BYLINE: When Mary Gaughan and her husband decide they want to watch a TV show or a movie, the first thing they think is...

MARY GAUGHAN: Where do we get it? We've already paid for these services. Is it free? Should we get the DVD? It's just like become a headache to me.

SYDELL: Gaughan says for TV and movies, they have subscriptions to Netflix, Amazon Prime and cable TV. For music, she's got a Spotify account and occasionally uses Pandora and listens to radio.

GAUGHAN: It's just way too complicated, and I feel like I need a strategy for managing my media consumption.

SYDELL: How does your credit card bill look with all this stuff?

(LAUGHTER)

GAUGHAN: It's pretty funny.

SYDELL: Gaughan is 48, married with two kids, so it could be generational. But 27-year-old Michael Weinberger feels the same way. He's got Hulu, Netflix, Spotify and a variety of other services. He got rid of cable because of the price. He thought about signing up for Amazon Prime, but decided against it.

MICHAEL WEINBERGER: I felt that, you know, to sign up for another program - which would have ultimately been another fee and probably would have been redundant - I kind of hit a saturation point.

SYDELL: YouTube has actually been slowly trying to woo money out of viewers. Adding subscription services is really part of an evolution for the company from its amateur video roots. Back in 2011, YouTube added a pay-for-movies feature. A couple of years ago, the company put down more than $100 million and partnered with stars like Madonna, who helped create a professional dance channel.

(SOUNDBITE OF YOUTUBE VIDEO)

UNIDENTIFIED MAN #1: Energy of great dancers are making the music pumping...

SYDELL: But a lot of professional producers aren't happy with only ad dollars. James McQuivey is a media analyst with Forrester Research.

JAMES MCQUIVEY: YouTube is in a revenue problem. They are doing a good job getting advertising from the content that is appropriate for advertisers, but it's not enough money for the companies making all of the videos on YouTube, spending what is now millions of dollars.

SYDELL: McQuivey agrees that YouTube is entering an increasingly crowded market of entertainment subscription services. But he thinks it's actually still early days.

MCQUIVEY: There is so much new content coming out, and so many new ways to watch it, that I think consumers are in a relatively extended honeymoon period with the idea of subscription.

SYDELL: The proof may be in the numbers. Paid subscribers to Hulu doubled in 2012 and hit four million last quarter. Netflix is inching up to 30 million paying subscribers. Since launching in the U.S. about 18 months ago, the music service Spotify has garnered more than a million paying customers. Michael Weinberger doesn't have regular cable TV, but he says he misses one network in particular.

(SOUNDBITE OF TV SHOW)

UNIDENTIFIED MAN #2: That's the whole point of this show, and the concept is be a top chef. Like, who can be the most bendable and not break?

SYDELL: Weinberger calls Bravo his guilty pleasure, and he admits he'd actually pay yet another subscription fee.

WEINBERGER: Well, if Bravo had it that I could just order their channel, I probably would do it, to be honest.

SYDELL: As the number of separate services increases, it's likely to open the door to a new business. Weinberger and Gaughan say they would pay extra for a service that organized all their passwords and subscriptions and made it easier to find what they want. Laura Sydell, NPR News. Transcript provided by NPR, Copyright NPR.

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