The subscription-based video on demand market could see a significant shake-up this year as it was reported that YouTube has started to negotiate licensing deals for its own service to compete with services like Netflix and Hulu.

Variety quoted an unnamed YouTube partner as saying that the company not only wanted to discuss a licensing deal, but was extremely aggressive in its approach.

An exec at one YouTube partner says reps from the vidsite reached out late last year about an SVOD licensing deal. But the offer came with a warning: If the partner didn’t agree to the terms of the subscription service, it would be excluded from any future ad revenue — a tactic YouTube has used in dealing with independent music companies that refused to get onboard with Music Key.

This is the same approach YouTube was said to have taken to persuade independent music labels to sign-up for the company’s subscription music service …

YouTube officially announced its long-expected subscription music service, YouTube Music Key, late last year, offering ad-free music, offline playback and background playing while using other apps for $9.99/month (free to Google Play Music subscribers). Extending this model beyond music would be an obvious next step.

While existing VOD services may be feeling nervous at the prospect, video analytics company Tubular Labs thinks that it’s cable companies who have more to fear.

“It’s TV and traditional distribution that are in danger of eroding,” says VP of marketing Allison Stern. “In terms of online video, the pie is growing.”

The full Variety piece, on the challenges faced by YouTube as it turns ten, makes for interesting reading.

Via TNW. Photo: AP Photo/Richard Vogel.

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