How Youtube Can Fix Their Revenue Problem

It appears that Youtube can only monetize about 4pct of its content. Which leads to the question of “how can Youtube monetize the other 96pct of its content ?”

The answer, believe it or not lives within Youtube and begins with another question: “Can Youtube generate enough traffic per video to cover the cost of reviewing content for copyright violations ?” After all, Google is the king of traffic generation and monetization, right ?

Now before you go all crazy and flaming about how many gazillion hours per minute of video is uploaded to Youtube and how it would be impossible to determine what videos had materials that is public domain, has already licensed content , is fair use, etc, etc,.. do some basic math.

If its estimated that Youtube will generate about 200mm in revenue around 4pct of its content, is it feasible to think that using a combination of manual and automated review, they could jump that to 20pct and increase their revenues by 500mm dollars ?

Would it cost more or less than 500mm per year to hire, train and put in place a datacenter that has enough people to take a quick look at the 10minutes or less videos, and if they are unsure if its copyright clean for any reason, run it through the content fingerprint database that Google already has in place? If the video passes, it goes to encoding and gets posted. If not, the same process that takes place when a takedown notice is posted againat a video is initiated. Someone has to prove they have the rights to the video before its posted.

Its that simple.

Realize that they are aleady doing this process for the 4pct of videos they do monetize.The 4pct have licenses from the content owner/distributor to Youtube. Youtube has to make sure that the person representing himself as the owner truly is. So they go through this process already and 4pct of videos is no small number. So they think the numbers work for those videos, so why shouldnt it work for all videos ?

At this point, someone says… why not just look for the videos that are starting to generate the most views and get in touch with them , sign a license and glom on some advertising ? Thats a problem under the DMCA. Youtube employees pretty much are not allowed to review their site for unlicensed user uploads. If they take a peak, and the video they look at has what appears to be obviously infringing content, they have to check it out and if its infringing, take it down.

So the Youtube cure is simple. Review videos first. Run them through the same process they use for the 4pct they have confirmed and only post those that pass.It should be a no brainer. After all, If Google cant leverage all their traffic and monetization skills to allow Youtube to continue to thrive after this change and finally generate revenue, who can ? IF Google cant generate enough traffic for qualified videos to cover this cost, why would content owners want to license their content to Google to put on Youtube ?

Of course, there is the risk that by introducing this process, Youtube loses its crown as the ultimate video destination. Its a tough situation to be in, when your mind is on your money and your money is on your mind..But sometimes you have to decide between the crown and the cash

5 thoughts on “How Youtube Can Fix Their Revenue Problem

  1. Carebears taste exactly like the hopes I devour when my interviews are posted on YouTube. I am in full support content staying free, and frankly I think my face looks younger when I am pixelated. This is a great tactic to keep viewers focussed off my aging in the new high definition broadcast enbiroment. Vote Bill O’Reilly 2012!

    Comment by Bill O'Reilly -

  2. As far as I am concerned – anything that on the internet is public domain. And the above poster was write in saying – …..If they have lots of restrictions viewers will just use other sites that will approve their videos. The more restrictions, the lesser user they will have

    Comment by Internet -

  3. Why would a premium content owner want just $15 CPM?

    If that viewer watches the clip on their destination site say Hulu.com they can get a much higher rate. Plus, YouTube generates a majority of their traffic from recommendations. I would argue if I was a hot content owner attracting audience to the YouTube site, I not only want the $15 on my play, but a percentage of all the recommendation plays my clip drives.

    There is huge value in the destination site \”YouTube\” so content owners who are giving this brand equity should not only be paid on the show – they show be paid franchise equity.

    Lastly, as Youtube controls more and more distribution they most likely will follow the path studios took when they vertically integrated cable, broadcast and theatrical in the 80s. If YouTube wins they will source their own production and it will be difficult to get enough traffic to get a show on the \”air\”. This will be great because executives at the Googolplex will see how expensive production of shows are and how ripped off you feel when they get uploaded to a directory with limited forms of compensation.

    Comment by Tim -

  4. To increase their youtube revenues, they need to do exactly what Mark said, hire the man power to review videos, put them through the filter etc. The key here where google will have to \”innovate\” (whoever thought that could happen) is they need to develop an efficient and streamlined process for reviewing the videos. A video should not sit in a review queue for more than 20 money minutes. Depending upon the length of the video, its should be reviewed, checked, monetized and uploaded within 1 hours period. As I mentioned, the key is developing a quick process to do this. Some innovative ideas here… http://www.johnassaraf.com/challenge.php?s=hiac2008

    Comment by Ryan Mettee -

  5. It\’s very hard for Youtube to earn as much as Google Video earns. If they have lots of restrictions viewers will just use other sites that will approve their videos. The more restrictions, the lesser user they will have.

    Comment by Investment Property -

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