Google’s YouTube drops channel partners

YouTube will only provide continued funding for about 30% to 40% of its original US channel partners during the coming year.

A year ago, the Google-owned video portal invested $100 million into creating 100 professionally produced channels to steer the site away from its image of just offering user-generated content.

Now, YouTube will only fund those that channels that proved to be successful and that includes those concentrating mainly on genres such as humour, music, cars and sports, aimed at a younger audience. A celebrity name alone, such as Madonna, Jay-Z, Deepak Chopra, Tony Hawk and Rainn Wilson, is not enough to make the channel a success.

Come December, the company aims to start a new round of funding of US channels with a limited number of existing ones and new ones being added. This move does not affect Google’s investment in the 60 European channels, which includes the BBC and Endemol.

Being profitable seems to be very difficult, as all YouTube partner videos are obliged to pay back Google’s investment in the channel out of advertising income before they are allowed to sell their own advertising. According to US trade publication AdAge, a channel needs 50 million views for every million dollars invested.

The top 25 new channels now average more than a million views a week and the top 33 have more than 100,000 subscribers.

Broadband TV Views. Google’s YouTube is trying hard to get a foothold in the traditional TV market, but as with hits Google TV venture it is a hard struggle. The company is used to dictate the rules online, but to master the traditional television world is an altogether different ball game.

In the US, we see that some of the original channels are very successful, such as Machinina, Mondo Media, Howcast and The Warner Sound. And then there was of course the Red Bull channel with Fred Baumgarten’s space jump breaking all online video records.

These channels will continue to be funded – and might also attract other investors (Google itself bought Machinima last May) or expand their business to producing for traditional television outlets.

On the other hand, YouTube’s effort to enter the premium paid-for content market has not paid off – in the US this continues to be the domain of Hulu Plus, Netflix, Amazon and others.

It will be interesting to follow how the new European channels will develop – the BBC is placing its bets on nature programming, one of its most successful ventures on the traditional screen – but will it work online?