On Thursday it will be two years since Google shelled out $1.65bn for YouTube, and sometimes it feels like all it’s had in return are escalating legal bills and bandwidth costs that would have bankrupted any other company.
So it was sobering today to speak to Shishir Mehrotra, the former Microsoft executive whose job it is to find ways to make money out of YouTube, and hear him state that the video site is “early in the experimentation process.”
Early? It is more than a year since YouTube announced the launch of “in-video advertising,” overlay panes placed over the bottom 20 per cent of some videos. That hasn’t done much: along with other gimmicks, like the video ad put on its home page and contests it runs on behalf of advertisers, YouTube is still only expected to pull in around $200m this year, according to the Wall Street Journal.
Today comes the latest idea: adding “buy it now” buttons to the site so that viewers who feel particularly moved by a video can go straight to Amazon or iTunes and purchase a related song, movie or book.
This idea certainly makes sense, though it runs up against the big issue that currently bedevils all the money-making ideas on YouTube: if Google tries to profit from any video clips that infringe copyright, it loses the protections of the Digital Millennium Copyright Act and risks a lawsuit. The first ecommerce links will appear only on “official” content posted on YouTube by EMI, Universal Music and Electronic Arts (for its Spore video game.)
Putting a “buy it now” link on user-generated videos - like that Frank Sinatra song howled by a musical dog - is trickier. Google’s “content identification and management system” is meant to pick out potentially infringing videos like this and give copyright owners a choice: have the video blocked, leave it be but track audience response, or try to make money from it through advertising (or, now, ecommerce.)
There is at least one positive sign. According to Mehrotra, copyright owners of more than 90 per cent of the material identified through its filtering system have picked the third option. Yet most of the large entertainment companies are still wary of Google and its filter and haven’t yet released their material to be used this way.
Thank goodness Google has the cash - and the patience - to keep experimenting.
UPDATE: Google today launched another experiment in expanding its ad revenues with AdSense for Games, writes Chris Nuttall. Google is inserting video ads during pauses in Flash-based games. Engineers from Adscape, the in-game advertising company purchased by Google last year, helped to implement the technology. Google will share revenues with game developers and publishers. It states 200m people play on the internet games each week.
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