/Drive+ Retention Rate (Update #2: Unsubscribers)

"GhostZ" (GhostZ) 08/10/2014 at 00:11 • Filed to: None

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We could go back and forth all day about whether or not /Drive should have switched to a paid subscription model rather than a brand/advertiser subsidized one. I'm more concerned with whether or not they're still making the money they need to be.

EDIT: Updated with some more info.

EDIT 2, ELECTRIC BOOGALOO: Updated again, hat tip to djmt1!

/Drive just reached 1,000,000 subscribers, but their Drive+ videos seem to be getting significantly fewer views than before, and it's now a question of whether or not they could end up in a spiral where they don't get enough subscribers to pay for good content, which causes more subscribers to leave.

So there's three questions I want to know:

1. How much money were they getting through Youtube's content subsidy?

2. How many subscribers are they seeing actually retaining and paying the $3.50?

3. How much has their budget expanded, to try and serve 3 outlets?

The inherent problem I see with this model is that once user have subscribed for a year or a month, they won't subscribe again . This means that if the budget runs short, they either have to draw in more subscribers or they have to shoot fewer videos. This would be fine if they produced lots of varied content for the average person, but Drive is a niche show. There is a limited amount of users to pull subscriptions from.

That means that once they have drawn on their initial pool, if they aren't reaching enough income, they not only can't expand but they won't be able to dish out the longer, high quality videos to whom they need.

From what I would guess, they have at most 10,000 subscribers on Drive+, with a retention rate of about 5%. That would yield 10,000 views out of 175,000 views on a non-paid video. I used the Sharkwerk video as a fair estimate. The same ~5.5% value holds for the LaFerrari video, but the M3 video has closer to 8% . This is perhaps because it is newer, and subscribers tend to watch newer videos earlier rather than later.

So that means that they are, monthly, likely making $40,000/month, +/- $15,000, but more likely on the high end as some videos are cracking 15,000 views. Basically, my question is, is this enough to support all of the content they had before, + Drive on NBC sports + the added length Drive+ videos?

EDIT: Okay, I found this:

!!! UNKNOWN CONTENT TYPE !!!

Supposedly the LaFerrari budget was around 9000 euros, or $12,000. Assuming that most videos are half that cost (it seems to be at the high end of their cost), we can assume most of their videos have a $6000 budget or so average per video.

At their peak before the break, they made 16 videos in a month, From April 10th to May 8th 2014.

This means their monthly budget would average 16*6000, or $96,000/month.

They need a minimum of 24,000 subscriptions at $4 a piece per month. This means that they must have either a ton of videos not watching, or they are not nearly meeting their budgetary needs.

So... does this mean that they are going to have to cut their budget?

If you don't like opinion, ignore the rest of this article:

Facts aside, and time for a bit of opinion, I also think the way they went about it was completely unprofessional. I've only seen it revealed in comments and twitter posts that the decision was made because of their funding contact with Youtube ending. Not only that, but at no point did they express the cost of the videos to their viewers, just assuming that people will understand it. They should not be surprised that people are "thumbs downing" their videos at a rapid pace.

To do it right, they should have had a clear beginning to their "break", a clear ending (both marked with brief videos that explains why they took the break, which has also only been talked about in comments, leaving most people to still be confused about why the channel dried up). Then, they should have had a video that outlined the financial situation and their costs, maybe even asking for viewer suggestions about what they would like to see.

Then, they should not be trying to provide 'teasers" for people who want to be a part of Drive+. Have some content on Drive, some on Drive+. Do not try to give us 3-4min snippets of what should be 15 min videos. The viewers will choose where they want to go and if they want to pay for it, trying to entice them is more likely to result in them not subscribing because

The only reason I can see why they throw up these 3-4 minute teaser videos is that if they didn't, they would have no content on the regular drive channel to put out. This is reasonable, but without knowing if they are truly limited in their budget, it's hard to say.

The channel has had 30 minute videos of dudes just talking about cars. Why is that suddenly impossible to do again? Why can't they have 1-2 minute videos about dudes talking about the channel?

And most importantly, why are they using stand-ins, different voices, impersonal graphics, and refusing to show scenes of the crew in the videos? Leo Parente, Matt Farah, and Mike Spinelli are bankable assets that seem to have been completely underutilized in this transition. People need something to hold on to if you're going to change the game on them, and these guys are that rock. Chris Harris is nice, but he's just one part of a bigger channel.

Opinions over!

Anyway, anyone know more about /Drive and Youtube and have some insights into their financial proposition, their budget expansion plans, and whether or not I should be concerned about their ability to continue to provide content a year from now?

Update:

!!! UNKNOWN CONTENT TYPE !!!

I was just alerted to this article (which I hadn't read yet because of how new it is) by djmt1. It seems to me that J.F. is fully aware of the backlash and while they received tons of initial subscriptions for the trial period, they were worried about people unsubscribing.

Reading between the lines, I'd say that if you want them to switch to another financial platform, the best thing you can do is unsubscribe . It seems straightforward, but they are using that as a metric for deciding whether or not this is working. I don't encourage this, but I am offering it as the most likely way to send that message.

I would also suspect that it is very likely that they are seeing a rate of unsubscription bad enough that they already won't commit to a year-long subscription.

This means if you don't like their platform, go on the trial, and then go off the trial before your card is charged. It doesn't cost you money to do that, but it does send a message (and you get to see some videos for free). This amplifies the effect of "We have enough people who like us, but not enough who are really going to pay for it" enough to make them decide to use another platform.

If you do want them to stay on the same platform, do the opposite. Subscribe, pay for it, and comment positively . This will send an equally strong message that they should stay with this model.

Flavien Vidal > GhostZ 08/10/2014 at 11:34

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"So there's two questions I want to know:

1. How much money were they getting through Youtube's content subsidy?

2. How many subscribers are they seeing actually retaining and paying the $3.50?

3. How much has their budget expanded, to try and serve 3 outlets?"

That's 3 questions...

GhostZ > Flavien Vidal 08/10/2014 at 11:38

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I originally just had two, I edited it to fix it though.

Flavien Vidal > GhostZ 08/10/2014 at 11:39

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I think that they need like 2% of their total subscription base in order to start making a living... Out of the 3.5$ a month, my guess is that youtube keeps 1$ on that. so with 20000 subscribers, they would earn 50K$ per month, which, combined with NBC's money and the ad revenue from the free /DRIVE, should be sufficient to provide people with content and pay the 12 people that work for /DRIVE...

It's a total guesstimation that I pull out of my ass though... not sure of anything at all lol

YSI-what can brown do for you > GhostZ 08/10/2014 at 11:41

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Another point is that you can subscribe for a month watch all the content on their and then not subscribe until next year.

GhostZ > Flavien Vidal 08/10/2014 at 11:43

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I found some more info, I'd estimate their costs at $96,000 a month. $50k may not cover that.

Flavien Vidal > GhostZ 08/10/2014 at 11:46

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Don't forget that they have some NBC and ad revenue... These 50k$ would be the money that they would get solely from the subscriptions... It's a huge chunk of their budget.

GhostZ > YSI-what can brown do for you 08/10/2014 at 11:47

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Right. I assumed that subscribers would stay subscribed for a whole year. They could see some wildly varied monthly subscription numbers if they aren't careful, which (since I assume that most videos from planning and budgeting to finished product take longer than a month) could be a huge problem.

YSI-what can brown do for you > GhostZ 08/10/2014 at 11:52

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Another problem with people subscribing to Drive+ is that /Drive used to be free and now they are charging for it. People HATE paying for what used to be free content. Not to mention no one wants to pay for a Youtube channel no matter how good it may be.

PushToStart > YSI-what can brown do for you 08/10/2014 at 11:54

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That's exactly what I plan on doing. I'll pay the $3.50 for a month, binge watch everything on the channel, and then unsubscribe. I'll probably do this 2 times a year.

They just don't upload content frequently enough. It makes no sense to pay 3.50 a month when you'll probably only get 1 or 2 major productions out of it. That's not their fault, it's just that it takes a long time to produce and edit videos. It might seem cheap, but I figure I could do that, or pirate everything. And I'd rather pay $7 (which is better than nothing) to those guys than nothing at all.

EDIT: it's $4 a month. Same thing, though.

GhostZ > YSI-what can brown do for you 08/10/2014 at 11:56

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I think it wouldn't be nearly so bad if people knew why they are being asked to pay.

I also think they highly underestimated their competition for free content. Ever since Motortrend and Evo hit the scene, Drive hasn't been the only game in town.

YSI-what can brown do for you > PushToStart 08/10/2014 at 12:00

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I honestly don't see paying for any of it. Chris Harris is just sort of meh. I am mostly there for Matt and the Big Muscle dude, but they both have their own channels and there is no reason to pay 4 bucks a month to see them. . . Plus paid content on youtube just seems backwards to me.

YSI-what can brown do for you > GhostZ 08/10/2014 at 12:01

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I know why they want us to pay, I just don't want to pay for it. Like you said, there is a lot of free content on youtube and a lot of it is really good like EVO and Motortrend. /Drive can try and make Chris a selling point but he seems a bit stale to me. . .

PushToStart > YSI-what can brown do for you 08/10/2014 at 12:15

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I personally like Chris Harris, I enjoy his videos a lot, and that's primarily what I watch /Drive at all. And as you mentioned in another thread, EVO has good videos too, as does XCar and Petrolicious, but /Drive does things a little different, and their style is really nice, I think.

djmt1 > GhostZ 08/10/2014 at 12:31

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That was a good read except for one thing. According to JF they met their two month sub target in two days so I think that they have enough revenue to cover their costs if they have done their budgeting right.

Also according to Chris, the P1 vid brought in £9,000 worth of revenue. As of now we can assume they have 25,000 subs all paying at least one payment of £2.50. So the first set of revenue should be around £62,500. The difference is that now they are paying for the costs themselves. So how much are they really making and is it sustainable that we do not know. Guessing averages and using one sample is pointless as I reckon Chris' film on the MX5 cost a shit ton less than the F40 V F50 video but there are no numbers to make a real comparison. All we know is that they are extremely happy with where they are sub wise so I guess all we can do is wait and see.

YSI-what can brown do for you > PushToStart 08/10/2014 at 12:35

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They do have their own style that is for sure, but is it worth paying nearly 40 some dollars a year for? I don't think so. I don't even subscribe to magazines cause I like(like EVO) because it is way too much money to read someone's writing.

GhostZ > djmt1 08/10/2014 at 12:41

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According to JF they met their two month sub target in two days so I think that they have enough revenue to cover their costs if they have done their budgeting right.

This actually surprises me. Mind if you have a source so I can add it to the original post?

It may also be that they're under-budgeting (like I suggested) without having Leo, Spinelli, Mike, or Matt possibly, omitting certain shows. Their "target" might be a lot lower than it used to be and they might have some of the regulars on hold until they know if they have enough money to continue their series.

Also according to Chris, the P1 vid brought in £9,000 worth of revenue.

That also seems odd. Assuming the video was at around 3mil when he said that (when did he say that?) that works out to about $1 per 25 views. That seems a bit ridiculous, I've heard of $1 / 1000 views before, but nothing that high. Was the P1 video also shown on NBC? If so, that can give us a starting point to estimate their NBC revenue, which would fill a huge gap.

...reckon Chris' film on the MX5 cost a shit ton less than the F40 V F50 video

Yeah, that's why I assumed an average of $6000 cost per video, not the $12000 cost of the F40 vs F50 video, assuming their low and high ends were probably $3000 and $12000 respectively.

ll we know is that they are extremely happy with where they are sub wise

Let's not get ahead of ourselves. Just because they met initial goals, doesn't mean that they're extremely happy. I want to know they are planning expansion, because if the are switching to a subscription model, they damn well better be making more money at it. Cutting back to meet goals may not mean that they are 'happy', or they might be getting a lot more funding from NBC than I originally thought.

djmt1 > GhostZ 08/10/2014 at 12:49

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http://drive.jalopnik.com/a-slight-lift-…

http://www.pistonheads.com/news/default.a…

Montalvo > GhostZ 08/10/2014 at 12:54

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I unsubscribed last week and I don't feel bad about doing so. DRIVE is filled with good guys but the way they went about it is all wrong. I would watch a 2-3 min advertisement for their videos but I won't pay $4 a month for a youtube subscription. There are plenty of other guys out there providing free/ad based content. The problem is those guys do it as a hobby or they have another source for their cash flow. The way DRIVE went about this seemed like a cash grab which is why there is a lot more backlash. I had a chuckle when I saw this on my facebook wall from MCM.

"It's probably a good time to respond to something that you may have read about by now. YouTube has implemented a paid subscription system where channels can choose to take a payment before you can view the videos. Some channels have already switched over. A lot of you have been asking us if we're going to go down the same path and if you are going to have to pay to watch our videos from now on.We are happy to let you know that MCM episodes will remain free, just as they have been for the last seven years. We created MCM because we love cars and we love filming and we want all of you to be able to share in that no matter where you are, how old you are or what your financial situation is. And we're proud to be able to do this completely independently from a network, broadcaster, publisher or media group. With the support of some select sponsors, and you guys out there, we've managed to retain 100% creative control over everything we do, and we're incredibly proud of that."

GhostZ > djmt1 08/10/2014 at 12:55

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Sounds to me like they started immediately getting people to cancel their subscriptions as they were approaching the 14 day limit. The number that J.F. quoted seems to be trials AND subscriptions, so it might be misleading. I'll keep it out right now since it would more or less just confuse the issue, I don't think it's conclusive enough to say they have enough.

Thanks for linking it though. Reading that makes me really think that the backlash and inability to serve international viewers has made them seriously reconsider their position.

GhostZ > Montalvo 08/10/2014 at 12:58

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It's just a ball of mismanagement by some great people.

If anything, it seems as if the best thing we can do is actually unsubscribe, because (as I was alerted by another commenter) J.F. is still on the fence about commitment to this business model.

djmt1 > GhostZ 08/10/2014 at 12:59

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Fair enough and you clearly said this is an opinion not analysis so I leave it at that. Plus all yearly subs were cancelled so I have no idea where their sub count currently stands it is all very cryptic at the moment.

Montalvo > GhostZ 08/10/2014 at 13:04

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As soon as you add a paywall you can kiss at least 75% of your view base goodbye. If they didn't think of that then they truly are mismanaged and headed in a truly wrong direction. I think oppo/jalopnik paints the most accurate picture here. Even amongst rabid enthusiasts only a few are willing to pay for a subscription. To me that speaks volumes about DRIVE's future if they continue as is.

GhostZ > Montalvo 08/10/2014 at 13:14

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I think the problem is that they are, at heart, not media men, and they are taking their advice from the wrong people who, themselves, aren't successful at building a fanbase (Lookin' at you NBC). Television and Youtube are two totally different worlds.

webmonkees > Montalvo 08/10/2014 at 13:39

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MCM also does (and sells) their own music, which would save x amount of money licensing music and generates income.

/Drive needs a band.

All Motor Is Best Motor > GhostZ 08/10/2014 at 13:58

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There's also Hooniverse, Petrolicious, Roads & Rides, X-Car, and a number of others. X-Car in particular is probably the most closely related to /Drive in terms of car videos. They don't have the extra fluff of motorsports reviews and whatnot, but frankly way less people are interested in those than the Chris Harris/Tuned type videos. At this point there's no way I'm going to pay for /Drive and it may sound cruel, but if they had to close up shop I wouldn't be all that upset. There's so much other good free content I won't really miss /Drive all that much. Hell, if Matt Farah left /Drive I think we'd finally see a higher rate of content from The Smoking Tire.

PushToStart > YSI-what can brown do for you 08/10/2014 at 14:05

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Not worth $40, but worth paying a few bucks a couple times a month.

mcseanerson > GhostZ 08/10/2014 at 14:08

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I am going to subscribe for at least two months and try to watch all new content on both channels from here on out and compare the two to get a feel for if it's worth my money.

Personally I think the move to a subscription model for the content we were already getting for free pretty much is not necessarily the best idea, at least not by itself. I think they should be packaging it with other things or find a way to increase their own content. The struggle for me is I am a cheap bastard frugal person and when I compare the subscription for Drive+ which costs half what my Netflix does I try to weigh it out and compare the value. Yes Drive+ is cheaper by itself but I am the only person in my home who will use it where the wife and kids watch a ton of Netflix and Netflix has far more content. What I would have liked to have seen would be a tie in with other services that car guys already pay for like Road and Track subscriptions or SCCA memberships, two things I am already paying for. The other road I would have liked to see them explore would be more tie ins with racing series we struggle to get coverage for in the US, especially for people with out cable.

Montalvo > webmonkees 08/10/2014 at 14:14

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That is Moogs department, so while MCM benefits from Moog's creativity, it is actually his job which in turn supports MCM. MCM never makes money directly unless it is through their magazine and clothing sales.

Mosqvich > GhostZ 08/10/2014 at 14:17

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To be honest, I initially thought the differences were just choices between seeing and not seeing ads. Obviously that's not the case at all. I haven't subscribed yet because it requires a computer. I've just been lazy I suppose. I typically watch videos on my iPad, not my computer, so Google's methods are not so great.

I suppose another thing they could consider is selling the videos on iTunes, etc... I haven't looked at the Smoking Tire movie on Vimeo because it seems like a lot of work just to watch a video. I mean, why not have it on iTunes and Xbox Movie, etc...? I realize they may not want to share revenue with Apple and Microsoft, but that is a way to get eyeballs quickly and more importantly easily. Google is not easy. Vimeo is not easy. iTunes, Amazon, and Xbox Video are easy - at least to me.

I don't think this was a bold move for /Drive. They're not great business people, they are great at what they do. Maybe /Drive on NBCSN is in essence underwriting this move? We don't see Petrolicious doing this, nor any of the other large YouTube channels, do we?

dogisbadob > GhostZ 08/10/2014 at 14:57

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I've always heard that the industry standard conversion rate from free to paid is around 2%, and that same figure is used when deciding whether to go paid.

The should have told us about their money troubles as soon as YouTube pulled their funding. Their poor way of handling things is almost as bad, if not worse, than the pay model itself. Then you have the limited availability (many countries cannot pay even if they wanted to).

I want to know how they think they would've done had the price been 99c instead of 3.99

McChiken116 - Patrick H. > GhostZ 08/10/2014 at 14:58

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They need money now that youtube is pulling out. They are doing this first, because they have always been the "Ragtag" version of MotorTrend, and the other channels. If this goes well, I expect to see all of those channels have premium options as well. Going into my gaming interests, the reasons those channels don't have to do the same sort of things as drive are purely based on viewership numbers, and more willingness to take money to try a game out. As soon as I get settled with my move next week, I will fully pledge money towards the channel, because I feel like a friend to those guys. Matt and Mike and JF especially are always chatty and down to talk. Zack of the Smoking tire and drive is the most chatty, tad cranky sometimes, but always funny. If skipping a coffee or a meal out every month means giving those guys cash, I am 100% in

webmonkees > Montalvo 08/10/2014 at 15:09

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The economics of it all are mind-boggling.

GhostZ > Mosqvich 08/10/2014 at 15:27

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Youtube reaches more eyeballs than iTunes, I believe. Particularly for video content. Youtube already takes a cut anyway, so if they make a switch to iTunes it would be solely

Bear in mind, Youtube is universal across Apple and Windows users, but iTunes is pretty much useless to Windows Users.

But, from what I've heard, iTunes has stricter requirements for what content they deem is usable, and rights ownership might be a problem for them. Not sure.

GhostZ > mcseanerson 08/10/2014 at 15:44

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Otherwise known as the "Premium Credit Card" gambit. They used to bundle hundreds of thousands of dollars of luxury services (free air miles, cruise trips, unlimited free auto rentals, free hotel rooms, etc.) onto extremely premium credit cards, all at low relative prices back in the 80s. You'd pay a high amount for the card itself, but you got such a wide variety of services from it that you were certain to at least break even relatively by being able to do things you normally wouldn't have.

mcseanerson > GhostZ 08/10/2014 at 20:13

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I'm not saying for Drive+ to add these things. I'm saying one of these should include Drive+ with membership/subscription. SCCA already includes a ton of stuff.

Marriokart > GhostZ 08/11/2014 at 16:43

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Listen to the Hooniverse podcast called Hooniverse Gold Subscription Plan (the most recent one) on shoutengine.com or iTunes. Matt Farah is on there explaining their reasoning. He says DRIVE gets about $2.50 for every 1000 views. Definitelty worth listening to if you're at all interested.

GhostZ > Marriokart 08/11/2014 at 16:47

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That's what's unfortunate about this. Why would I have to go to a Hooniverse Gold Subscription Plane Podcast on itunes to learn about why Drive on youtube changed their model? There is a lot of bad information going around, and worse, no information going around.

Marriokart > GhostZ 08/11/2014 at 17:07

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I agree completely. In the video, JF should have done a much better job of outlining what people will get for their money, even if he didn't want to fully explain their reasoning. DRIVE hasn't done a very good job of getting the information out there, but it is out there somewhat.