Commentary

For YouTube, Scale Solves It

One of our favorite topics to talk about and debate, whether it is here on the Video Insider, on other blogs or in conferences, is YouTube.  Whether it is the merits of the acquisition by Google, copyright issues or just the general fascinating scale of the service, YouTube is a topic that we have yet to tire of discussing.

Google's well-known opaqueness when discussing key statistics and figures about YouTube only adds to the controversy.  Last year, Eric Schmidt admitted that it hadn't yet cracked the formula to make money from the service.  This helped fuel the trend of bloggers and analysts estimating that YouTube was a cost and resource drain.  

We're starting to see Google attempt to dispel some of these notions (which are largely based on rumor anyway).   During the Google earnings call last week, executives highlighted impressive growth such as a tripling in the number of monetized views.   Chief Financial Officer Patrick Pichette said that profitability was within its sights -- in the "not too distant future."  

Another interesting move on Google's part was a recent post to the YouTube Biz Blog called  "Myth busting."   In the spirit of the Discovery Channel TV show "MythBusters," YouTube takes several "myths" about the service to task.  Each one is more interesting than the next.  One has to be impressed with the progress that YouTube made on the advertiser front: according to the post, over 70 of the top 100 Advertising Age marketers ran campaigns in 2008.  YouTube also hins that tools to give advertisers more control over where the ads appear on the site are coming soon.

Three of the myths have been mentioned so many times that they are somewhat accepted as industry fact on why advertisers haven't poured money into the service in the form of sponsorships.  They are: that YouTube is mainly short-form user-generated content; the videos are poor quality; and that YouTube is only monetizing 3% to 5% of the site.  

What is interesting is that YouTube does not outright deny that these are false (with the exception of the latter, which the post says is wrong without citing the accurate percentage).  Instead, there's an emphasis on the site's positives: thousands of premium content partners, hundreds of full-length movies, more HD streams than any other site and hundreds of millions of weekly monetized views (more than most competitors' total views).   

So YouTube does not disagree with many of the issues advertisers have with the site: its proponents would just like to point out that it also has tons to like. Scale solves it, for YouTube.

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2 comments about "For YouTube, Scale Solves It".
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  1. Jonathan Mirow from BroadbandVideo, Inc., July 27, 2009 at 7:02 p.m.

    How does spin "solve it"? Just curious here...YouTube is playing the old Microsoft game of "give it away until everybody else is dead" - just take a look at AOL video or MSN Soapbox, both DOA because they couldn't reach the levels that YouTube had. Of course YouTube loses money, but because they're owned by Google who has more money than God, that doesn't much matter. But solving problems? I don't think so - throwing cash in a hole is not solving a problem.

  2. Josh Kaner from Undertone Networks, July 28, 2009 at 11:32 a.m.

    2 "breaking" pieces of news that will surely add to YouTube's bottom line:

    1. Blip.tv will be allowed to serve ads into their content viewed on YouTube: http://bit.ly/u63ew

    2. AND, more importantly- Freewheel is starting a trial that will allow pubs who are syndicating content to use Freewheel to serve ads into the YT player on their own pages: http://bit.ly/j6h2a

    I am certain YouTube will be taking some sort of cut of each of those.....even if it's a small percentage. And both are big breaks away from Google's traditional stance on serving advertising (wherein they control everything and are not very transparent with publishers in terms of rev shares, etc.)

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