Is Google Monetizing YouTube?

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.