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Eric Schmidt, the search giant's chief executive, said it "seemed obvious" that Google should be able to generate "significant amounts of money" from YouTube, on which hundreds of millions of videos are watched every day, but that as yet it hadn't figured out how to go about it.Google Still Unsure How To Make Money With YouTube [technology.timesonline.co.uk]
In an interview with The New Yorker writer Ken Auletta, Mr Schmidt was cautious about how profitable YouTube might be, but said he believed the site could lead to "the creation of a whole new industry." He said his optimism was based on two facts: "We know people are watching it" and "We have the luxury of time to invest."
That said, when I was a young man I set up a photo filing system for my employer.
It sank in slowly as people tried to use my system that people see pictures differently. Numbers are easy, text can be handled often, but filing pictures where people can find them (and put ads on them) is tough.
My advice would be to find a major sponsor for the overall service at first. "YouTube Wednesday, brought to you by Pepsi!" (Music, video, la la la...) See Super Bowl for other ideas.
Eric Schmidt, the search giant's chief executive, said it "seemed obvious" that Google should be able to generate "significant amounts of money" from YouTube, on which hundreds of millions of videos are watched every day, but that as yet it hadn't figured out how to go about it.
I wonder whom it seemed obvious to... I would have thought it would be difficult.
I guess some of us were right when we thought Google Defending YouTube Purchase [webmasterworld.com] was silly...
Oh yea, the quote back then was...
Google Chairman and CEO Eric Schmidt said Tuesday that it will take time for the company's recently acquired YouTube online video-sharing service to become a major source of sales and profits for the company.
[edited by: BillyS at 2:09 am (utc) on June 15, 2008]
However, in G's world they may find this a bit of a struggle.
See you need to have Account Manager, Brand managers, traffic people, planners and more... ie read a Digital Media Agency.
G can't even manage Adwords customer services for their biggest clients ... so this could be a tough nut to crack.
They will need to buy a media business like Media 24/7 or how about WPP.... then they can have everythgin in-house and start to make money on YT - but all that takes serious money and serious commitment - does G want to do that?
My opinions is, you can offer adwords advertisers a cpm model that will work on youtube based on channel and descriptions. Similar to their tv ad model ads will be displayed at the beginning of each video.
Just my 2 cents.
There would still be a free service, but some longer and higher res movies would only be available to subscribers. I think they could have an annual charge for as much as you can watch. They could also charge the content providers for bandwidth, promotion (ie charge to be a featured video) etc.
Charge users say, $29.95/year IF they want to unlock High Definition web viewing. I'm talking Apple.com trailer video quality...
It's working wonders for iTunes ($1 per song).
Every motion picture movie would be released next day straight from dvd -> youtube.
I doubt youtube can really make them any more money, the traffic they get just wants to see funny, interesting content. They're not clicking on ads, they want to see funny videos, watch music, etc. The only way they can extract dollars from these viewers imo, is to give them a better viewing experience. So thus, youtube is no longer a ad revenue platform, but a cable/video hire network.
They could supply HD content for the world. New movie releases, music videos, adult vids, etc.
I say its going to take another acquisition or a competitor to kick googles gears into monetizing it.
Adsense on there is about as worthless as you can get unless you're simply trying to brand something in which case i'm not sure you're better off doing ads when you could be making a free video. (missing the point of youtube - the irony of it all)
That`s how they succeed.
In the search market they have crap competition, in media they will have to mature into a real media company to remain competitive. Only providing upload services will not be enough.
Why is it so hard to have a...
Because Google/Youtube KNOWS that most of these impressions are made on copyright protected content, not on some shaky video done by a teenager with a mobile phone. One of the prerequisites for being protected by the DMCA (which actually backs the whole Youtube service) is that NO direct financial benefit is being created by the infringing activity. THAT makes it so hard for Youtube to earn ANY money off copyright protected content. THAT's why we are seeing no pre-roll/post-roll/in-roll advertisement. It's not a technology issue; it's an IP law issue.
AdSense ads are not the solution. The way to monetize YouTube, if there is one, is to follow the path of Napster. (New version.)
Google's problem with YouTube is it had no idea how to make money with it before or when it bought the site. Google had never monetized anything like YT before and had no basis to believe it could. Total pipe dream, excuse the pun.
Eric Schmidt, even today, sounds like a 1999 internet businessman. He's talking about eyeballs = money. That's so pre-dot-com bust.
The simple fact is there are very few ways to monetize YT. It's either ads and/or subscriptions. Ads aren't going to work (they've already tried); that leaves subscriptions.
P.S. I'm not optimistic about the future of video online. If I want movies, I got cable. If I want news clips, I got cable. I don't pay attention to video ads online (more annoying that image ads).
Why is it so hard to have a 2 second 'sponsored by' image/animation before every video?
Do you actually like commercials? The reason Universal Tube (UTube) is so popular is that its not commercialized. The minute it becomes a commercial a new grassroots site springs up and everyone goes there.
good points that you raise.
If G wants to earn anything with youtube they have to play the rules of media. Shaky freakstuff will never attract top advertising dollars and G has to invest into proper content production like everyone else.
Also the design department does not seem to be competitive at all with no real further developments in comparison to other sites.
Media is not that easy to challenge as Yahoo and MS.
Maybe they should just admit defeat and kill it? - Don Reisinger
Youtube is not only one amazing site, it is also a very powerful brand.
And, while they may not yet be making huge profits, I suspect the losses are not too great either (by G standards). They have time and to spare.
Is Don Reisinger always totally bananas, or is this a new development? I've not read such a sad analysis for many a month.
[edited by: Quadrille at 4:42 am (utc) on June 20, 2008]