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Is Google Monetizing YouTube?

Posted on Thursday, Jun 14th 2007

Now that it has been a few months since Google bought YouTube, we can look at how it is benefiting from it. Comscore data for March 2007 seems promising. YouTube’s popularity has made Google the most frequented site for streaming videos. Out of 57.4 million unique visitors who played video clips on Google, almost 53.5 million came through YouTube. Google thus enjoys 16.7% market share of online videos compared to Yahoo!, the nearest rival commanding only 6.2% of the market. The study went on to establish that 30% of US surfers prefer YouTube for streaming videos.

Google has already started making efforts to monetize YouTube. First step in this direction is to retain successful content producers, so YouTube has quality content. In January 2007, Google made an announcement to reward producers who share completely original videos. Taking this a step ahead, YouTube in May 2007 invited its popular providers to become partners. YouTube also organizes international meetings called “As One” of its most recognized contributors. These are welcome moves but require careful policy making so providers benefit financially too, not just by lip service.

Google is also paying attention to copyright issues to avoid getting entangled in Viacom like suits. Some companies like Universal Music Group after filing suits against YouTube took a u-turn on realizing its popularity. They signed agreements with YouTube to promote their videos. Not all companies however, want to do so.

YouTube’s existing system of filtering violent, pornographic, defaming and other inappropriate content is obviously not enough. To strengthen their stance on copyrights, Eric Schmidt, Google’s CEO, on April 16, 2007 announced introduction of Claim Your Content, a content filtering system to help identify and eliminate copyrighted material. As of May 2007, this service is in testing phase.

Google has some other innovative ideas too. It plans to offer Click-to-Play online video ads based on AdWords. Promoting this is the introduction of Google AD Creation Marketplace, a forum where advertisers can meet professional video ad makers. Google can earn more revenue if it allows advertisers to interact with YouTube content providers. This will be a win-win situation for advertisers and service providers, since advertisers will get cost-effective product placement, while producers will get a platform to showcase their skills. I like this effort a lot.

A March 2007 statement by Eric Schmidt warning investors against expecting too much from YouTube in the near future, sums up Google’s situation. Ultimately, success of its YouTube acquisition will depend on the way Google irons out copyright issues, promotes video ads, and entices advertisers. None of this is happening at a large scale yet.

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Can you explain to me why your headline on Seeking Alpha says “How Google is monetizing Youtube” yet your article above says “Is Google monetizing Youtube?”

There is a HUGE difference between those 2 headlones. Google is not making dollar 1 with youtube outside of some crappy adsense ads that no onle looks at or clicks on.

The reason I ask is because I am sick and tired of watching “journalists” have complete Google blindness. Google does a lot of great things, yes, but please call a spade a spade.

To say that Google is monetizing Youtube and then explain that they have lots of traffic and are doing their best to avoid ANOTHER lawssuit is a total disconnect.

No one has the guts to say that Google hasn’t dont squat with youtube from a $$ standpoint. Not to mention that all of their most watched videos are either in japanese or look like porn. Take a look for yourself.

I’d love to see someone write an objective article about Google…just once!

youtubemakesnomoney Friday, June 15, 2007 at 9:03 AM PT

Well, Seeking Alpha’s editors are always dicking around with my headlines. I agree with you, their headline makes no sense, because the article IS about YouTube not yet making money.

And if you read my prior articles about Google, you will see, I am a strong critic of the company.

Sramana Mitra Friday, June 15, 2007 at 11:18 AM PT

Hi Sramana, This is a good article… there is a flurry of video platforms out now, and all the top production houses have their own video platoforms.. today an average consumer is watching TV and also downloading videos on their computer while seeing youtube videos on their phones… they hop platforms almost every minutes.. these companies make their money in advertising and unless measurement is in place, not a single penny is going to move which is going make monetizing youtube really hard.

Check out the real metrics platform my divinity Metrics, they provide rich analytics and demographics on several platforms including Youtube and I think their service is really valuable and is the first step towards monetizing any online video content.

Cheers

Drew Thursday, July 19, 2007 at 6:41 PM PT

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To make money with YouTube, this is what Google has to do…

On the most viewed clips (clips with, let say, at least 1000 views) (doesn’t matter who posted them) you implement a 5 seconds overlay ad, that appears over the player and blocks out (darkens) everything else. (It gives a bit of time for the clip to load in the background as well).

This overlay is a 5 seconds spot (can’t be longer than that and it doesn’t link to a company website if you click on it. It’s like a really, really short TV spot. It can be a still picture for outfits with very little budgets…)

Now, people don’t like ads… but they like GAMES and they like to COLLECT stuff.

Each overlay ad is a mini 5 seconds GAME. You have three colored dots on the overlay. The viewer clicks on ONE of them. One is a winner, two are duds. If you’re lucky to pick the winner (you only have one chance) during the 5 secs, you receive a TOKEN that is automatically added to your YouTube account. (It encourages you to stay registered…)

Now, you COLLECT these tokens. If you win a certain number of similar tokens, you can EXCHANGE them against full-length HD Hollywood Films or TV shows on YouTube. The fun part could be that you have different categorires of tokens. (Some would be for specific film genres or just for one TV show and some could be really hard to find, worth maybe ten tokens, etc.) (Tokens are generated randomly by the system.)

Now, you have the problem of guys posting shows and seeing Google make money off their film. Well, they need to be rewarded too. For a succesful posting (ie lots of viewers) they receive TOKENS as well to be exchanged to watch high-quality HD movies or TV shows…

Now, these HD movies or TV shows can also be sponsored with a longer lead-in spot… That’s even more money for Google.

Now, we have the problem of big brand names not wanting to have their spots stuck on “Jimmy and his weird cat”… Well, they could “control” where their 5 Secs. spots go by teaming with content suppliers through YouTube. Example, a Coca-Cola campaign with Viacom clips… Viacom takes all the succesful shows they own like, as an example, “Spongebob”. They cut out little “gems”, two to three minute clips and they post them on YouTube to watch for free… Viacom via Google sell their 5 second spots to Coca-cola. Everybody is happy. The viewer, who enjoys these mini-clips, can even link to the full episode of Spongebob on YouTube. He can pay by redeeming TOKENS or he can PAY with a CC for the full episode or combine both. (It’s all streaming! It’s like TV a la carte.)

Now, what about the “Jim and his weird cat” clips. Who pays for these 5 secs ads? Well, it’s like Google’s Adsense, it’s small outfits who purchase so many spots. You can buy a thousand spots or ten thousand spots to be randomly placed on clips or based on the clip’s TAGS. The outfit supplies the spot or the still and pays Google directly up front.

A system like this is not that difficult to implement. It’s fun for all involved. Everybody is a winner especially Google who makes tons of money from the big guys but also… most importantly…from the long, long tail of all the little guys. Viewers are hooked to YouTube forever!

Here, you have it.

Twowan,

(If Google wants more ideas like this one, they can contact me. I’m the guy behind laboratoryfilms.com)

Twowan Thursday, November 6, 2008 at 5:37 PM PT

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