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INTERNATIONAL - YouTube wants to prove to its biggest stars that the popular video service is more than just an advertising business.

The Google-owned company is paying talent upfront sums to use and promote new features, including paid memberships and an enhanced chat, according to people familiar with the deals.

The amounts range from tens of thousands to hundreds of thousands of dollars, said the people, who asked not to be identified as they are discussing terms that aren’t public.

YouTube introduced paid memberships, paid chats and a new merchandising programme earlier this year to placate top talent and keep up with major competitors.

Many people with large followings on the video site have complained that it doesn’t offer ways to make money beyond advertising and that YouTube’s efforts to shield advertisers from controversial content has hurt their sales.

Competitors have seized on that dissatisfaction. 

Facebook Inc. and its Instagram service have approached YouTube stars touting their new video features, while Amazon.com Inc’s Twitch and Patreon offer the chance to reduce reliance on advertising by selling subscriptions to fans who want early access to programming or the ability to use certain symbols in chats.

“If YouTube’s not scared of Twitch yet they should be now,” Casey Neistat, a popular filmmaker, and video blogger said in an interview with the Verge in May.

Merchandise Sales

YouTube has responded by making it easier for creators to sell merchandise and by expanding the number of users who can sell a monthly subscription. 

The new Super Chat lets fans of a given YouTube star pay to highlight their messages in live streams. Such features offer higher profit margins to YouTube and its parent company Alphabet Inc, which been looking to make money from sources beyond advertising.

“It’s something creators have been asking for, and we’ve built the products hand-in-hand with them,” Neal Mohan, YouTube’s chief product officer, said in an interview at the time.

“We have no new initiative in place,” the company said separately. “We have always invested in our creators’ success and will continue to do so to ensure they have a great experience and can find continued growth and opportunity on YouTube.”

YouTube has in the past offered talent direct payments whenever it felt pressured by new competition, such as Vessel, a short-lived video service that tried to strike exclusive deals with top YouTube talent. In 2014, YouTube paid bonuses to creators who agreed to provide their videos exclusively.

These new YouTube contracts don’t require people to post only on YouTube, but they do prohibit them from posting first on competitors’ sites.

- BLOOMBERG