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YouTube Starts Paid Subscription Service

Thursday, 9 May 2013 | 5:17 PM ET
YouTube Launches Subscription Channels
Thursday, 9 May 2013 | 3:00 PM ET
Google's YouTube Channel starts at $0.99 a month, reports CNBC's Julia Boorstin.

YouTube unveiled its subscription services for its YouTube channels, as it looks for a way, beyond advertising, to cash in on the 1 billion users per month that visit its site.

Though YouTube allows content creators to sell individual episodes or movies, this move seems like a dramatic shift as it treats its most popular videos like premium content—a move away from its emphasis on free, ad-supported video.

The pilot program starts Thursday in 10 countries, with 30 partners and 50 channels, ranging from full episodes of Sesame Street to Ultimate Fighting Championship fights.

Over the next few weeks, YouTube will roll the option out to other "qualifying partners," allowing them to decide how much to charge, in which countries to launch, and whether or not to include ads. It is expected that the majority of the launch partners will not offer ads. (Click here to see a full list of the paid channels.)

Subscriptions start at 99 cents per month, though the average for the pilot channels is $2.99.

Users will pay via Google Wallet, and will be able to access their subscriptions via computers, smartphones, apps, and on Internet-enabled TVs. Google wouldn't disclose the revenue split, just saying that content creators will bring home the "majority" of the revenue. YouTube stressed that it will be a self-service product for its content partners, which means they will be able to control the process.

Will this threaten Netflix or even paid cable or satellite TV? Some of the content featured isn't so different—partners include NatGeo Kids, HDNet, and DHX Media, which has 8,500 hours of kids programming, including Inspector Gadget.

"YouTube is not television," said Malik Ducard, YouTube's Director of Content Partnerships, stressing that it's all on-demand, a la carte, and designed to foster interaction between creators and viewers.

But perhaps most importantly, there's the capability to stream live events, though none of the channel creators are taking advantage of this feature at launch.

In other words, YouTube is competing directly with Netflix and Amazon for on-demand subscriptions, and with the option for live streaming—and the fact that users only pay for exactly what they want—it could be a game-changer.

—By CNBC's Julia Boorstin. Follow her on Twitter: @JBoorstin

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  • Working from Los Angeles, Boorstin is CNBC's media and entertainment reporter and editor of CNBC.com's Media Money section.