Google doesn’t know how to make money from YouTube
Google seems to have found itself in an unique quandry - it has an asset and it doesn’t know how to make money from it.
In an interview with the New Yorker, CEO Eric Schmidt said that Google was stumped over how to monetize YouTube and make a return on its $1.65 billion investment in the site.
But he added : “We have the luxury of time to invest.”
He’s right of course. Google is not hurting for cash so they don’t need to start making money out of YouTube right now. They can sit back and wait a few more years, throw some ideas around and have a long think. YouTube is one of the most popular websites in the world, visited by 129 million people each month, so any monetization strategy that they do eventually come up with has to be the right one. If they come up with the wrong one, it will instantly alienate a big portion of that 129 million. So Google has to get it right first time. There’s no room for error here.
So better to wait a while longer and get it right first time, than rush in now and botch it up big time.
So what are the monetization possibilities for YouTube?
In my mind, there are only two - Google Adsense on YouTube webpages and adverts inside YouTube videos. I personally prefer the first option as it’s less intrusive. But Google won’t go for it because YouTube videos are all over the web due to the embedding codes available. So a lot of people view YouTube videos without ever going to YouTube. You can see YouTube videos here on my blog for example without having to go to YouTube. Google is not going to let those viewers slip away.
That’s probably why in the end, they will probably slip short adverts into people’s videos.
Now this will probably get really contentious really fast. Will users have a say over what kinds of adverts get shown in their videos? How long will the adverts be? Will it be at the start of the video or at the end? What if users object to the advert ultimately chosen? Can they lodge a complaint with Google and have the advert changed? If so, how long does this complaint take?
No doubt there will be other issues but these are just the ones I can think of off the top of my head.
Here’s an idea - what if Google offered a paid premium YouTube service whereupon users paid a monthly fee to Google to opt out of the adverts? I can see some heavy users going for that.
I know Google has to make money from YouTube somehow. They’re a business and they paid a heck of a lot of money for YouTube (probably far too much). They are also letting YouTube sit there for too long generating no money whatsoever. But when the day comes when Google decides that it’s time YouTube should start paying its way, you can expect a lot of screaming and hollering from the hardcore YouTubers about adverts getting into their videos.
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June 16th, 2008 at 2:34 pm
Or they could offer a premium version that is for heavy uploaders (a la Flickr) and then also disable ads for those users. People might be more willing to pay for that.Another option is one they already are implementing, where there is an ad on the right side, above the clip’s info, and it is coordinated with an ad that sits on the bottom of the video screen (like a sports ticker). If you hover over the one in the video, the sidebar ad suddenly expands. I think it is annoying, but probably pretty effective. This would also work for outside of the site, because you can click on the embedded ticker on the bottom of the video.
June 16th, 2008 at 2:40 pm
I think the premium version would be the best idea. They could offer a lot of extra features for the monthly fee to make it appealing such as faster uploading, better picture quality, online video editing tools and so on.A ticker? Like a moving one like the sort of thing CNN used to have at the bottom of their screen? I don’t see people accepting that. I for one would hate something like that. It would distract people from the video they were watching and would probably, in the long term, lead to people using other video sites.
August 2nd, 2008 at 4:19 am
Google people disgust me. They payed millions for youtube and now they waste it.
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October 3rd, 2008 at 1:19 am
I find it hard to believe that google bought such a huge asset without some idea of how to monetize it.
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