YouTube is cracking down on content creators whose “branded integration” [that is, product-placement, or promotional] deals haven’t been given the go-ahead from the video site.

According to Mediaweek, “the company issued written notifications to several producers … reminding them that according to its Terms of Service, users are not to post commercial videos on YouTube without permission.”

Does this mean that YouTube could pull these producers’ videos? Well, if the video mega-site finds that the content violates its Terms of Service, they would be within their rights to do so. But, as Mediaweek points out,  the issue-behind-the-issue is that Google, parent company of YouTube, needs to do everything it can to wring a profit from content played on the site.

If content creators are forging agreements of their own with advertisers, Google/YouTube isn’t getting a cut of the ad revenues.

A recent estimate indicated that, although YouTube gets the lion’s share of the online video watching audience (in the neighborhood of 40 percent), the company is hemorrhaging money. The sheer magnitude of storing and serving so many millions of videos costs the company upwards of a million dollars a day. You can see how they might want to squeeze additional revenue from any resource they can.

On the other hand, YouTube has to tread carefully with their “warnings,” so as not to anger or alienate the video producers that create the content that drives the viewer attention to their site.

I asked some video series producers today about how YouTube’s crackdown on branded integration would affect him. One, who asked to remain anonymous (lest he suffer recriminations) said:

“Errrrgh. How can I say anything? I can’t really comment about it – it would violate my Terms of Service if I were to even talk about it.  I can’t talk about lack of sales tools or handicaps I face…

In general terms, YouTube is in the habit of asking people to do things, but not providing them with the tools to do it.

They might ask,
‘Hey, wouldn’t it be great if you sold some inventory on your videos using Google Gadgets?’
And I’d say, ‘Sure, but do you have any sales materials I can use?’
And they’ll say, ‘Um, no.’
‘Can I create some?’
‘Um, no.’ ‘
Any ideas on how I can….?’
‘No. Sign this NDA [non-disclosure agreement].’

But you can’t not put your video on YouTube if you want viewers to see it. You have to go with the flow, and see what happens –  and make money if you can.”

Tim Street, creator of the “French Maid TV” how-to video series [pictured, above], which is produced with particular corporate sponsors in mind, had a more sympathetic view of YouTube’s predicament. They are in the business to make a profit, but, he said,

“YouTube is not making money, because they are giving it all away for free.

They may have the biggest audience for online video viewing, but free doesn’t pay the bills. Think of it this way: if you had the biggest, most popular hotel, with the highest occupancy rate anywhere, but you gave out rooms for free, how would you make any money? If you didn’t have room service of your own, but let Domino’s deliver pizza to guests’ rooms, how would you make any money?

There’s plenty of money to be made with online video. YouTube is still ironing out the details on that.”