August 28, 2007

Google Monetizes YouTube - Not User Generated Content

Google paid YouTube over a billion dollars and has revealed how it plans on monetizing the site. An Adage article states that instead of running across the site's consumer-generated content, Google's in-video ads will run on 3,000 professional content partners and 70 independent partner channels. Google's new YouTube ad formats will be graphic overlays that cover the bottom 20% of the screen and go away if not clicked after 10 seconds (a method pioneered by Videoegg)

Ads on professional content partners is not a model which monetizes the core concept of User Generated Content. It could well have been achieved without acquiring YouTube in the first place, and by just uploading good professional content (with ads) on YouTube pages. Obviously there are constraints to monetizing YouTube, otherwise Google wouldn't have a chosen such a fundamentally deviant method.

Constraints to Monetizing YouTube

  • User Generated Content is that its difficult to verify all uploaded content and advertisers would hate for ads to appear in "inappropriate" or copyrighted content.
  • What about ads in the same page as the content? We are all familiar with adsense right? Well the problem is that the tags used to define these videos are diverse and is meant to drive traffic towards the video from every possible source. Automatically adsense based on tags and content becomes that much more non targeted.

What should the Monetization Model be for YouTube? (How I wish I were paid for thinking about this stuff)

Well one of the models that can be followed to use UGC to generate money goes like this...

User uploads Video in a specific category with specific keywords/tags => Video hits it big => Reaches a threshold viewership, rating and is shared amongst viewers in a defined period of time => Achieves a threshold rating => Reviewed by the YouTube team for content and keyword authenticity =>

Advertisers bid on keywords/categories and provide ad content to be placed in a format specified by YouTube => Advertisers choose number of videos they would like ad placed on and whether they would like 1 video a day/week etc => They can also define threshold viewership, rating etc => Highest bidders get the best videos to advertise on => Once the number of videos for highest bidder is exhausted, second highest bidder gets ads in the next most popular videos and so on => Ad is auto inserted as graphic overlays that cover bottom 20% of the screen for first 5 seconds and last 5 seconds of the video, followed by a full screen still for 1 second

Since only a limited number of videos will cross threshold viewership - monitoring and reviewing these videos is much simpler and solves some of the constraints we were discussing earlier. What remains a question is how will viewership be affected with ads on erstwhile free content?

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