Eat The Press

Monetizing YouTube — And YouTubers: How?

Posted Wednesday November 15, 2006 at 08:12 AM

Sunday's New York Post brought news of disaffection among grassroots users of YouTube, who feel they are being left out of the licensing deals that YouTube has been striking with the likes of major copyright holders such as NBC, CBS, Warner Music Group, Sony BMG Music and Universal Music Group. But with Monday's announcement that Google finally closed its acquisition of YouTube, regular YouTube posters may soon be getting a piece of the action.

Already, amateur videographers need look no further than Google Video for signs of good things to come for YouTube. Just last month, Google struck a breakthrough deal with EepyBird, the backyard scientist duo behind the viral video sensation known as the "Diet Coke and Mentos Experiment". EepyBird has now posted the sequel to the "Diet Coke and Mentos Experiment" — "Extreme Diet Coke & Mentos Experiments II - The Domino Effect " — on Google Video in exchange for an undisclosed share of any advertising revenue generated by the clip. For now, such Google Video sponsorships are only available to "major producers" who have 1,000 or more hours of video to their credit. Google may be reluctant to lure amateur posters away from YouTube by offering such sponsorships to the broad base of Google Video users, and, no doubt, small-time video posters will continue to grouse that they are being left out of the action. And, they have a point: YouTube relies on the enthusiasm of the user community, both in creating original content and in taking the time to upload it, original and otherwise. So, now that Google's acquisition of YouTube is officially completed, the obvious question is, how will they monetize that content — for themselves and for their users?

A preview may be found in last month's short-lived videosharing site called GreedTube.

Designed and developed over the course of a single day, GreedTube combined YouTube's video embedding technology with Google AdSense, the "contextual advertising" program which scans a website's text to find keywords that it considers significant and, on the basis of those keywords, produces little text ads in the margins of the website which, when clicked, generate advertising revenue which can be shared with the website's owner. GreedTube allowed posters to keep half of any advertising revenue generated by videos uploaded onto the site, but when YouTube promptly served GreedTube with a cease-and-desist letter, GreedTube shut down as quickly as it had gone up. But it left behind a blueprint. Can the incorporation of Google AdSense, beloved by bloggers everywhere, be far behind?

As a revenue-generating model, Google AdSense does have its limitations — at least in its current format. Google AdSense does not look beyond the page the user is currently on to find out what kinds of ads to run — at least not yet. But Google is in the process of developing a program called "flow-tracking", which analyzes the user's recent search history in order to create a more accurate and complete picture by which to hone targeted ads. YouTube, apparently, may be the first place that Google decides to run its flow-tracking program, as Google's head for North Europe recently suggested in an interview with Der Spiegel (catch the English summary here). Though the privacy issues involved are significant, YouTube would appear to be a good place for Google to roll-out its flow-tracking program. Unlike blogs, websites or gmail messages, YouTube clips provide no text for Google AdSense to scan through other than the title and the tags. The relative dearth of textual information is exacerbated by the gonzo nature of many YouTube clips, including the most popular ones. What's more, some clips (like this one) have tags that have been deliberately loaded with a bunch of random keywords in order to increase the video's exposure on YouTube, thereby making it more difficult for AdSense to determine what kind of ads to run. But with flow-tracking, Google AdSense would be able to find out what kind of ads to run by looking to the user's history--on YouTube as well as Google. And with YouTube, such ads wouldn't even have to be text-based (as they are on Google); instead, YouTube could feature a brief commercial at the beginning of each video clip depending on what kind of webpages and video clips the user has recently been looking at. With more and more people getting more of their information — and entertainment — through Google and YouTube every day, networks and newspapers can only dream of advertising as targeted as that.

In the meantime, the race for top-notch amateur video talent has been heating up. Revver.com, the pioneering videosharing site where the original "Diet Coke and Mentos Experiment" was first posted, has been giving video posters half of any advertising revenue generated by their clips (reportedly earning EepyBird as much as $35,000 in advertising revenue in July alone). Metacafe, which features short ads at the beginning of videos posted to the site, has been paying $5 for each 1,000 views after reaching a 20,000 view threshold, netting Metacafe's top-earning video, a three-and-a-half- minute exercise in Matrix-like acrobatics, more than $24,000 over the course of more than 4,800,000 views. These sums — and the money earned over at Google Video by "Extreme Diet Coke & Mentos Experiments II - The Domino Effect" — may be small for now. But it may only a matter of time before regular YouTube posters can dip their toes into the growing stream of Google's advertising riches.

— Sven Hodges