Can YouTube Turn a Profit on Free Video? (10-5-09)
Who pays $1.65 billion for a video sharing website, manages to lose nearly a billion dollars on it every year, and eventually tries to figure out a way to monetize it? Who else? Google.
Unlike television networks that pay for content and profit from advertising, YouTube has always given away content that they get for free, selling ads that come nowhere near to covering their costs.
In fact, Credit Suisse analysts estimated that Google will spend over $700 million in 2009 to run the site, most of that going toward bandwidth and content licensing agreements.
So they decided to become a little more like the networks.
YouTube’s Partner Program, launched in 2005, brings the traditional broadcast business model to the internet by offering to promote the videos of users who have already established their own following. Banner ads that appear next to the videos and pre-roll ads that play before the videos generate revenue that Google then shares with the creators.
Some stars of the program include collegehumor, communitychannel, theonion and wastetimechasingcars.
Originally, users had to qualify and sign up for the partner program based on their hit totals. Now YouTube is extending the program by sending an “enable revenue sharing” email to popular users who never applied or would not have originally qualified.
One “not-yet-completely-cool” example of a YouTube revenue-sharing partner with lots of potential is Demand Media’s eHow site. The idea is that viewers are willing to sludge through short pre-roll commercials in exchange for all kinds of short How To videos. For example: How to Make Your Husband Feel Good and How to Make Your Husband Want You Again. And if those lessons don’t take hold, and I’m not kidding about this, just two titles further down the list you’ll find How to Get your Ex to Use Visitation Rights. (Shouldn’t that one at least be in a different category?) Something for everyone!
Unfortunately, like most short pre-roll ads that precede commercial web content, these are adapted from traditional broadcast ad formats instead of something edgier and better suited to the web. Eventually, they’ll figure it out.
But for now, who wouldn’t be willing to suffer through a short commercial in order to get to the irresistable How to Play Arpeggios in Jazz Guitar?
Bad Taste Meets the Behemoth (11-1-09)
Microsoft just came micro-close to pulling off a cutting edge experiment combining traditional broadcast and viral advertising. Except they lost their nerve.
Scheduled to air November 8, the entire 30-minute episode of Family Guy titled “Family Guy Presents: Seth & Alex's Almost Live Comedy Show," is an admirable experiment in embedded branding. Instead of cutting away to commercials, the entire uninterrupted show is all about Windows 7, Microsoft’s new OS.
Admirable, that is, unless it turns out to be too much branding and not enough entertaining, in which case viewers will bolt during the show, rather than waiting for the commercials (which won’t be there).
Apparently, no one at Microsoft ever watched Family Guy. The special contains “riffs on deaf people, the Holocaust, feminine hygiene and incest," Variety reported. "In other words, it was just like a regular "Family Guy" episode." Not exactly consistent with the Windows brand, whatever that is.
In other words, way too controversial. Experiments in embedded branding like this one are going to have to develop from the ground up, grassroots style. Microsoft has proven that the behemoths, once again, have gotten it half right. They strapped on their bungy cord and walked to the edge of the cliff, but just couldn’t jump. Too much to lose, they figured. And they’re probably right.
Fox has not yet announced their new “integrated sponsoring partner” for the broadcast.
Update: (11-13-09) After Microsoft bailed, Warner Brothers came in as the new sponsor, bookending the show with ads for two of their new movies, Sherlock Holmes and Ninja Assassin, featuring the Family Guy character Stewie. Oh ya, and all mention of Microsoft or Windows was dropped from the show.