Blog Insights: YouTube and advertising: Accepting the inevitable

by Dan Blacharski

August 27, 2007 —

What bloggers are saying about the latest in information technology

You wanna play, you gotta pay. YouTube has ads on videos now, a common-sense move that long-term is the only way for sites like these to survive. Fortunately for YouTube users, the "pay" end of the deal is that you have to give YouTube advertisers your eyeballs for a few seconds.

CNet has some links to videos that actually have the ads already, so we can get a good look at what they are really like before we launch into a tirade. I looked at a music video from a band called Madina Lake, and there was an ad for the new "Simpson's Movie" that was superimposed over the bottom of the screen. The ad took nothing away from the video at all, and disappeared after a few seconds. Users can choose to click on the ad to see a full-on commercial, or they can ignore it and continue watching the music video. At the end of the video, the commercial appears again, giving you a second chance to click on it. (Oh, and nice piece of music, by the way.) In short, the YouTube ad model is relatively unobtrusive, and seems to be a good way to monetize these increasingly popular social web sites. Interestingly, the YouTube commentary that accompanied the video was more about the ads than the band, and users seemed about equally split between whether or not YouTube is even justified in placing ads.

The revenue derived from the ads is shared between YouTube and the content provider-a nice touch, and similar to the way Google (YouTube's owner) presents text ads on web sites.

Of course, there is a vocal audience that says yes, they are obtrusive, and YouTube has no business putting ads on their precious videos. These critics will always be there, but will eventually get less attention. YouTube's own blog makes a short entry about the ad format, and although the entry itself doesn't tell us anything new, the responses also give us a good idea of how ads are going to go down with the YouTube public. Like the above CNet blog, the responses are divided between acceptance, unrealistic expectations and demands for "No ads!", to dire predictions "The beginning of the end of YouTube!". Contrary to the latter speculation however, this is not the beginning of the end of YouTube, rather, it is the beginning of realistic business models for Internet sites. And of course, the rants of "no ads!" completely ignore the fact that YouTube and Google and in business to make money, not to provide free services for whiners and movie-maker wannabes.

Blogger and author Nick Carr started commenting on the issue back in May, when he told us of a bet with Yale professor Yochai Benkler, author of "The Wealth of Networks," an ivory tower presentation if there ever was one. Benkler's book argues that the Internet is creating a new type of social production that does not rely on monetary compensation to create quality. I have to wonder if the good professor has ever taken an afternoon to sift through the dreck that consists most of the social sites that exist today. Carr counters Professor Benkler's argument, noting that the reason that social media "exists outside the price system" is just that a price system has not yet evolved. With the release of YouTube's ad program, the price system is here. The most talented producers will inevitably demand compensation for their time, as well they should; and this move by YouTube will hopefully usher in a higher level of quality artwork.

The Blog Herald again echoes the fact that the earliest and most vocal users have loudly called foul, but as the Herald points out, "advertising pays the bills," which in the case of YouTube, are substantial. And despite the YouTube founders' original idealistic point of view on the matter, the video site is just not sustainable long-term without an aggressive ad program.

The reason YouTube ads will succeed, despite criticism, is the same reason Google AdSense ads succeeded. Sure, lots of people criticize those little text ads that appear on the right side of so many web pages, but they're not going anywhere, and they generate billions of dollars for Google. And they have become successful because they give small web publishers an opportunity to derive a little revenue. Who says creating videos for YouTube has to be the domain of purists who eschew the profit motive? If you're good at it, and provide quality videos for the YouTube audience, you deserve a cut of the profits, and Google's giving it. Take advantage of it.

ITworld.com