Monetizing YouTube’s Massiveness

We all know the 800lb. gorilla in the online video room is YouTube. And in YouTube, to some extent lie all the hopes and dreams (and the nightmares!) for making a market of online video.

YouTube is the largest player in the space and though Google doesn’t separate out numbers, bandwidth and operation costs make YouTube, like so much of the online video world right now, a money-losing proposition. But Eric Schmidt has time and again stated it will make money. And now there are a few different ways that, while possibly schizophrenic, show the fervor with which Google is trying to meet that goal.

Raising the Bar on Premium Content

Earlier this week, YouTube announced that MGM and Fremantle would begin posting free full-length movies on the site, paid for with a few commercials with the movie. They join CBS and Lions Gate as premium content providers willing to brave the wilds of YouTube for a crack at the 60 million viewers.

The aggressive courting of studios and networks is an admission by YouTube that its organically generated user content isn’t drawing the necessary advertisers to the platform and a nod to the growing power of Hulu to capture those dollars. While YouTube is clearly the more massive of the two in terms of audience and page views, Hulu has been cleaning YouTube’s clock when it comes to advertising dollars and unless the former moves more quickly the battle will already be lost. Its current stable of premium content is dated, but with MGM/Fremantle deal it now has fare like “Bulletproof Monk.”

Leveraging Tim Gunn’s Tide

More in keeping with YouTube’s parent and the self-serve environment you might expect from a company whose tagline is “Broadcast Yourself” is the addition of sponsored ads modeled on Google AdWords. For a fee that you choose, you can create a sponsored video ad that will show up when people search on YouTube. The Tim Gunn Tide ad is an excellent example of mixing brand and content.

Let’s say you search on “Tim Gunn” because you’re fascinated by his quick wit on “Project Runway.” Alongside the 471 clips tagged “Tim Gunn,” you find a Tim Gunn ad for Tide. Click on the ad, and you land on the Tim Gunn Tide Total Care Channel. This is more in line with the kind of thinking required for YouTube to monetize its content. In playing catch-up with Hulu, it’s moving slowly and serious concerns remain about its massive unruly universe.

YouTube is starting to capitalize on what people do when they come to the site: searching for stuff they’re interested in, then viewing a commercial offering that gives them more content they might be interested in. That’s the way people use the Internet today. That’s essentially what YouTube is about. And that, more than playing catch up, is how its money will be made.

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