#5 Exploring MotorInc’s Youtube Content Strategy: Free vs. Paywalled Content — using GPT-4o

I recently discovered the MotorInc channel on Youtube and instantly fell in love with their videos. I binged all their podcast content — the “First View Podcast” and “This Connect Podcast.” Their engaging discussions and insights into the automotive world kept me hooked. Once I was done with the podcasts, I noticed there was even more content available. However, most of their 10-minute short reviews were behind a member-only paywall. This piqued my curiosity.

Do they earn more by pay walling content? To answer this question, I decided to dig deeper and find out.

Understanding Revenue Models: Free vs. Member-Only Content

YouTube content creators have several revenue streams, but two primary ones are ad revenue from free videos and subscription revenue from member-only content. The decision to put content behind a paywall can significantly impact a channel’s earnings. Let’s break down the potential earnings from both approaches.

Assumptions:

Revenue per View for Free Videos:

• Calculated using the average CPM (Cost Per Thousand Impressions) for a motor review channels
• Assumed average revenue per view: ₹0.06

Subscription Revenue for Member-Only Content:

• Subscription fee: ₹400 per month
• Percentage of subscribers willing to pay: 1%
• Total subscribers: 310,000
• Paying subscribers (1%): 3,100

Calculating Revenue: Variable revenue per user

We need to consider different scenarios to determine the optimal balance between free and member-only content. Here, we’ll calculate the monthly revenue for various combinations of free and member-only videos, considering different revenue per view rates for free videos (₹0.02, ₹0.03, ₹0.04, ₹0.05, and ₹0.06) with 1% paid subscribers.

Calculating Revenue: Variable % paid subscribers

We need to consider different scenarios to determine the optimal balance between free and member-only content. Here, we’ll calculate the monthly revenue for various combinations of free and member-only videos, considering different percentages of paid subscribers (1%, 2%, 3%, 4%, and 5%) with a revenue per view rate of ₹0.06.

Key Findings

Revenue Per View Variability:

• Higher revenue per view rates (₹0.06 per view) significantly boost earnings from free content.
• Even at lower revenue per view rates (₹0.02 per view), strategic use of free content still contributes meaningfully to total revenue.

Percentage of Paid Subscribers:

• Increasing the percentage of paid subscribers from 1% to 5% dramatically increases total revenue.
• Member-only content becomes increasingly lucrative as the percentage of paid subscribers grows.

From the analysis, it’s evident that having a higher percentage of paid subscribers exponentially increases the revenue. While not much can be done to control the revenue per view, it is crucial to first ascertain the revenue per view rate. Once that’s determined, the focus should shift to increasing the number of paid subscribers.

When Does It Make Sense to Charge More for Subscription?

To determine when it makes sense to charge more for a subscription, we compare the highest revenue in the ₹200 subscription matrix with the corresponding scenarios in the ₹400 subscription matrix. Specifically, we’ll focus on the condition where the revenue exceeds ₹3,430,000, which is the highest amount in the ₹200 matrix.

Scenario 1: 400Rs per month membership

Scenario 2: 200Rs per month membership

Analysis

1. Revenue Comparison for 3% Paid Subscribers:

• At 3% paid subscribers, the revenue exceeds ₹3,430,000 in the ₹400 subscription matrix.
• The lowest revenue at 3% paid subscribers in the ₹400 subscription matrix is ₹3,720,000 (100% paid content).

2. Threshold for Higher Subscription Fee:

• To justify charging ₹400 per subscription, MotorInc needs at least 3% of its subscribers to be paid subscribers.
• At 3% paid subscribers, the revenue for all combinations of paid content and free content in the ₹400 matrix is higher than the maximum revenue in the ₹200 matrix.

3. Optimal Percentage of Paid Content:

• In either case (₹200 or ₹400 subscription), it is best to maintain 12.5% to 25% paid content and not cross 25%.
• This balance ensures significant revenue growth while keeping enough free content to engage and attract new viewers.

It is optimal to stay in 12.5% to 25% paid content range.

To analyze the potential earnings for MotorInc under different subscription fees, we’ll consider the following subscription amounts: ₹100, ₹200, ₹300, and ₹400 per month. We will evaluate the revenue for 12.5% and 25% paid content scenarios across different percentages of paid subscribers.

Here by subscription fees, I mean channel membership fees

Final Recommendations

1. Determine the Revenue per View:

• Establish the average revenue per view to understand the baseline earnings from free content.

2. Increase the Percentage of Paid Subscribers:

• Focus on converting more subscribers to paid members, aiming for higher percentages to justify higher subscription fees.
• Offer exclusive, high-quality content and clearly communicate the benefits of membership.

3. Maintain a Steady Stream of Free Content:

• Continue to provide engaging and valuable free content to attract new viewers and maintain audience engagement.
• Use free content as a tool to convert viewers into paid subscribers.

4. Maintain 12.5% to 25% Paid Content:

• Ensure that the proportion of paid content stays within the 12.5% to 25% range to maximize revenue and keep the audience satisfied.

5. Experiment with Membership Fees:

• Test different membership fees (₹100, ₹200, ₹300, ₹400) to determine the optimal price point that maximizes revenue without alienating the audience.
• After finding the amount users are willing to pay, you only have to increase the % of paid subscribers.
• After a higher % paid subscribers is achieved and growth has plateaued, you can consider increasing the membership fees. Look at above table to see what effect the 5% paid subs have for every 100Rs increase in Membership fees.

It makes the most sense to max out the % subs at lower membership fees first then gradually increasing the membership fees for exponential revenue growth.

6. Review and Adjust the Strategy Based on Data and Feedback:

• Continuously monitor viewership data, revenue reports, and subscriber feedback.
• Be flexible and willing to adapt the content and pricing strategy based on performance metrics and changing audience preferences.

By following these priorities and focusing on optimal subscription fees and content balance, MotorInc can maximize its revenue while ensuring sustained growth and engagement with its audience.

Although this has been written with the perspective of MotorInc’s channel, It is applicable to all YouTube channels. the variables will change but the findings will remain the same.

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This was the 5th installment of my Analysis using ChatGPT series. 95 more to go. Consider following if you liked the post. It took a long time to analyze.