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YouTube spends a tidy, and growing, sum to stream its short clips. Current estimates range from $900,000 to $1.5 million per month. Much of that goes for computer servers and transmission bandwidth. But because the company is charting a delicate course in how it handles pirated videos, its legal costs could balloon if lawsuits start piling up.
Aware of the risks, YouTube co-founders Chad Hurley and Steve Chen are moving slowly to ramp up advertising. They have been wary of asking viewers to sit through a 30-second ad before a two- to three-minute clip. Instead, YouTube is developing new formats, like ones rolled out in August that let marketers build their own video channels or pay to place a video on YouTube's popular front page.
The kind of problem that affects all community driven websites - large or small : when and how do you integrate advertising or other revenue structures?
They should think instead about putting advertising around the vids - so that you can still watch the movie clip - without any delay - while still being "exposed" to adverts.
As oppossed to lots of adds, I'd go for one advertisers "theme" per page. The entire page would be branded according to the sponsor e.g. background colour, images/text box, stylesheet, links to advertiser. There would not be any annoying floating things or pop ups - and the layout would need to remain the same from page to page to avoid annoying everyone - so that includes the top left movie area and the links to other videos.
I would pay to have a link to my site or to make the video clickable. I would also consider paying to have the video encoded at a higher resolution and bitrate.
On a related note I would love to see them set up a friends network like myspace.
[edited by: MrSpeed at 1:59 pm (utc) on Sep. 11, 2006]
It's interesting to me that many of the most popular videos are coming from professionals. (Comedy Central's Daily Show, for example.) Now, if I where Comedy Central, I'd have a MAJOR problem with what YouTube is doing. (Keep in mind that these cable channels get paid by the cable companies as well as from the ads.)
Google should be looking for ways that producers of these videos (large and small) can get ads on them. Now, how YouTube is going to share in that, I have no idea.
Ads at the end of the video would make more sense. Give the user an option to go "do something" after they've watched a video. Watching a video of Diet Coke and Mentos? Show an add for Walgreens or something.
I recall people saying similar things about MySpace, who recently signed an ad deal for nearly a billion dollars.
YouTube needs to monetize, and perhaps they can look to TV broadcasters for answers - commercials before, after, or during (probably not a great choice) videos, a small superimposed ad (like soccer/football broadcasts that can't be interrupted for commercials), or framing ads (like some news/weather/preview channels) come to mind.
As far as ad targeting, I haven't seen the stats, but it wouldn't surprise me if a few hundred videos (or at most a few thousand) account for a large portion of the total views. Scanning these and assigning keywords and content characteristics wouldn't be that big of a deal. As a new video began to generate a lot of views, it would pop onto a "review ASAP" list so that ads could be targeted.
YouTube's primary problem is not its cost, but its lack of income
Surely these are hand in hand are they not.
It's cost is the primary problem because if this did not exist to this extent they would not be having to force advertising on the user so soon?
Likewise lack of income means they will be getting poorer (or rather their investors will be) by the minute at that monthly burn - hence the need to advertise.
Or am I missing the point if this quote?
Every business model is different, of course, so the one sure thing is that they need profits instead of losses.
They must be losing a fortune daily in bandwidth bills.
Maybe they are just trying to drive up the brand name against any competition and waiting for the big payoff in selling the company?
I wonder if their bandwidth is bought on credit and not real cash?
The impression I get from reading financial articles about them is that the "business plan" of YouTube and other similar sites isn't really to make a profit, it's just to make as much publicity as possible and hope to sucker some big fish into buying them out.
It happened to eBay with its inexplicable but much-written-about takeover of Skype for example (the performance of Skype is still nowhere near justifying its enormous $2.6 billion purchase price, and there's no obvious synergies between a cheap phone service and an auction house). Another example (this time from the first dotcom era) was Yahoo buying broadcast.com for $5.7 billion.
massive problem with youtube - lots of people are using it to watch music videos.
It appears to be starting according to this AP story [mercurynews.com].
<edit>story appears to require registration, sorry. try here [foxnews.com]</edit>
Universal Music Group CEO Doug Morris said the wildly popular Web sites YouTube and MySpace are violating copyright laws by allowing users to post music videos and other content involving Universal artists.
"We believe these new businesses are copyright infringers and owe us tens of millions of dollars," Morris told investors Wednesday at a conference in Pasadena.
"How we deal with these companies will be revealed shortly," he said.