YouTube’s revenue model

It looks like YouTube is finally going to have a revenue model of its own. Chad Hurley, one of the founders of YouTube, recently spoke in Davos about YouTube’s plans:

The revenue model is interesting. As you heard from the video their software will pick up which songs or other content is in videos published to YouTube and the content creators/rights holders will be notified that their content is being used and there will be some form of compensation or monetisation involved. In time there will also be a revenue share with users themselves.

I am curious how this will work in practice. John Battelle says there may be 3 second ads that roll at the beginning of a video (bit like the CNN model). He also referred to a post on the Google blog which talked about a video AdSense system which is really intriguing as an advertising option. I hope we won’t be forced to watch a few seconds of an ad at the beginning of a video. That would spoil the experience, I think. As Battelle points out, the users will decide what they want and this will reflect in their usage of the service with the new ads in place.

Steve Poland, writing on TechCrunch, commented that monetising videos like this may incentivise advertisers to invest in ads for this sort of platform. That could also add to the appeal of something like YouTube if a series of really popular ads are going to be posted to YouTube. I agree with him there. Better ads could provide a fair amount of entertainment themselves and be worth visiting YouTube just to watch. How much would a captive audience like that be worth?

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