This week I took part in a panel with fellow Internet video execs at the RBC Conference. Everyone on the panel was in agreement that brand advertisers want to sponsor “safe content”–professionally produced content that runs on reputable sites. Having said that, I don’t think that is YouTube’s only solution–there are other monetization models currently in the market such as display ads and overlay ads that can be priced on a CPA (performance) basis that could be used to monetize UGC. There may also be other monetization models not yet developed that may be used to cash in on YouTube’s massive volume of UGC inventory. At the end of the day, although the content is primarily UGC, it represents a significant volume of traffic and (as Blinkx CEO Suranga Chandratillake pointed out during our panel discussion, but not quoted in the article below), more than anyone, Google can afford to lose a little money on YouTube as it figures this out. After all, Google didn’t monetize search through advertising AT ALL during its first few years, but they ultimately figured out how to do that pretty well.
YouTube hasn’t been able to monetize videos of eighty-year old men mooning a crowd of onlookers? It hasn’t been able to monetize someone lip-syncing “I Kissed A Girl?” Who would have thought that?
At a recent meeting of Internet videoSelling-Entertainment-Online Jan-08 executives at the RBC Capital conference, the panelists told those in attendance that user-generated content simply doesn’t provide any real monetization value and Google needs to find new ways to turn things around if it wants to turn a profit.
Later on, the execs said that the key to Google’s success has nothing to do with user-generated content and everything to with professional content, which can be controlled, analyzed, and properly determined to appeal to the key demographics advertisers are looking for.
“What we’ve found is that advertisers and agencies are only interested in professional media, so professional content providers are having a good time finding extremely high demand because they have a lack of video views,” Blinkx CEO Suranga Chandratillake said.
And for once, we’ve finally heard what YouTubeYouTube ‘s business model should be. It needs to forget about user-generated content and trying to monetize that and actively seek ways to entice more people to its professional content and make it a greater value proposition for its advertisers.
Of course, Google has already taken significant steps in that direction as of late with deals between YouTube and Seth MacFarlane that will see the “Family Guy” creator working on a series of short cartoon spots designed exclusively for Google.
But the company’s initiatives need to go far beyond just that. It needs to keep user-generated content on YouTube because that’s what people are looking for most when they go there, and try to support that section of the site with display ads. On top of that, it needs to coax more companies to bring professional content over and actively sell advertising on that content, which is not only controlled, but user demographics can be analyzed and advertisers will be able to determine if the site is worth spending money on.
YouTube is an extremely expensive endeavor for Google that has yet to bear fruit. But if Google is smart, it will listen to what the execs said at the RBC Capital conference and start to actively seek out professional content that will entice more companies to spend money in the space.
If it doesn’t, look for YouTube to look even more like a bloated waste of money.