YouTube's "15 Months of Fame" is almost up

When I spoke with Chad Hurley, one of YouTube's founders, a few months ago, he told me point blank that YouTube would never need to serve ads tied to the videos themselves because their video serving technology backend was so efficient that they could cover their costs and make a profit with less intrusive options.  Not sure if this is true, but he said it very confidently :-)

What Chad did not predict is the pressure he would face from sites like Revver, and now Google Video, that offer monetary incentives to the content creators.  YouTube may or may not be more efficient technically, but they are not anything if people start uploading their Dry Ice Bomb videos somewhere else.

The announcement this week (via NYT) of Google and Viacom's content deal foreshadows a lot of what is to come.  Google Video is working with major content providers to get their content and in return will pay them ~2/3 share of the ad revenue.  In addition, Google will pay websites/blogs a portion of their 1/3 for displaying the videos.  (This is a model first brought to life by our friends at Revver.  Sorry guys...bad news)

What does one do in response to such an attack?  Looks like Chad decided to flop on his earlier statement.  The article in NYT reports that Julie Supan, a spokeswoman for YouTube, said that in the next few months it would start testing the sale of advertising to accompany its videos.  Quite a shift, but understandable with all of the pressures that they will be getting on the content side.

SIDE NOTE:  Lets all remember that NBC is still paying YouTube to display its content (See earlier post).  Viacom is getting paid for their content.  Wow, someone really got screwed here.

Comments

[Brad Bowers]

One of the big issues that YouTube faces in putting ads around the content is that much of the video content on the site is there illegally, and so it is illegal for YouTube to directly monetize those videos.

Companies like Revver, who are essentially paying the video producers, are able to directly monetize these assets.

Certainly if Viacom elects to put it's videos on Google and share revenues, this makes it legal for Google to do so.

Unless YouTube can determine a way to secure and monetize legal content, they are always going to struggle to fully monetize their site (not to mention they will continue to receive cease and desist letters from the owners of the video content that is illegally posted).

[Jetpacks]

Surely YouTube has also considered the countless blogs and other sites that embed YouTube content, making the reach for potential advertisers that much greater.

It'd be hard for Chad NOT to flop on his statement at this point. I dont think they've reached the end of their run by any means. They have the name recognition going for them at this point and can afford to modify their model. Users won't bail, not even your backyard dry ice bomb enthusiasts.

Google is just doing what Google does best - finding something that works and stealing the idea, tweaking it just a bit and making money from it.

But in the end "Google Video" just doesn't role off the tongue like "YouTube." They branded it well. It'll stick.