Figuring Out How To Make Money From YouTube Is Google’s Top Priority

Apr 30th, 2008 | By | Category: Citizen Media, General, Internet TV, Making Money with Podcasts, Streaming Video, Video

CNBC has published a great interview by Maria Bartiromo with Google CEO Dr. Eric Schmidt. In the interview, Schmidt says that figuring out how to make money off YouTube has become the company’s top priority:

Bartiromo: Let me ask you about YouTube and MySpace. YouTube has these phenomenal growth rates. What do you think is behind that?

Schmidt: Video is powerful. And it’s amazing. You know, we started off with Mentos and the other sort of fun videos, and now people, because they have so many digital cameras, are essentially uploading everything. Furthermore, we’re beginning to see glimpses of significant professional content on YouTube. People are using it–because there’s such a large reach, they’re learning how to reach that audience.

We’re working but have not yet in my view gotten a breakthrough around monetization. So while we have lots and lots of traffic and we have lots and lots of interesting and creative people and all sorts of controversies–we’re blocked in countries, so on and so on–I don’t think we’ve quite figured out the perfect solution of how to make money, and we’re working on that. That’s our highest priority this year.

Bartiromo: Which is a huge priority, clearly. A lot of people feel like this is an amazing opportunity for you. So, as far as monetizing that business on YouTube, do you think that takes a year? Does it take the next five years? What’s your time frame on that?

Schmidt: We believe the best products are coming out this year. And they’re new products. They’re not announced. They’re not just putting in-line ads in the things that people are trying. But we have a number–and, of course, Google is an innovative place. The Yahoo! team are trying various new forms of advertising, ones which are much more participative, much more creative, much more–much more interesting in and of themselves. Google believes that advertising itself has value. The ads literally are valuable to consumers. Not just to the advertisers, but the consumers.

Bartiromo: They want to look at them.

Schmidt: When they’re targeted. When they’re the right ad for what you’re doing or what you care about.

In a nutshell, Google’s top priority is making video advertising as contextual as its text-based advertising options.

Can Google Make Money From YouTube?

ReadWriteWeb’s Marshall Kirkpatrick has a great commentary on the interview. He suggests that Google will struggle to make money off of YouTube, because the Internet is creating a massive shift in how people use their time:

Passive media and advertising does not have a bright future, and many people in those industries who are watching the direction the internet is going know it.

Old media has assumed people just want to consume but that the internet is showing that people want to consume, produce and share. If just a tiny fraction of that consumption continues to shift towards production and sharing – there’s going to be some serious cultural and economic disruption going on.

That’s why YouTube has to come up with something fundamentally more engaging than banner ads run next to music videos.

While Kirkpatrick and others, like author Clay Shirky, make strong cases for the continued growth of user-generated content, they seem to ignore the fact that most people still like passive consumption.

Most people read Wikipedia, but never contribute to it. Most people watch YouTube videos, but never post a video. Most people watch or listen to podcasts, but never make their own.

There may be big opportunities to make money of active Internet media – but history, the current state of the Internet and human nature suggest that there’s an even brighter future for companies, like Google, trying to make money off of people entertaining themselves on the Internet.

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No Responses to “Figuring Out How To Make Money From YouTube Is Google’s Top Priority”

  1. Marshall Kirkpatrick says:

    Fair point and thanks for the kind words, but I don’t think Shirky is ignoring the fact that most people prefer passive consumption. See his point about how only a tiny fraction of a change would have huge implications. Plus, I don’t know that those of us closest to new media production always give enough credit to the people who produce less than us and that we think are being passive. just 2 cents 🙂 take care!

  2. James Lewin says:

    Marshall – thanks for your comments.

    Shirky (and you, too) makes an interesting argument – but he hasn’t demonstrated that the people making podcasts, YouTube videos, editing Wikipedia, etc, used to watch TV with that time.

    And if you’re suggesting that just a tiny fraction of a change could have huge implications, aren’t you also saying that most people are going to continue to be passive consumers of entertainment?

    The “cognitive surplus” concept is fascinating – but I’m still skeptical.

  3. taniaelis says:

    Google will have a hard time with this. Who wants their advertisements next to laughing babies or that Britney Spears guy?

  4. EJ Topping says:

    There truly is a revenue generating business model which will pave the way for youtube to dominate the internet and justify Google’s investment in youtube. Of course, I intend to submit this model to Sequoia Capital (their venture capital source) and launch the method myself. I actually created this business model 7 years ago and sat on it while youtube launched and ran right by me. Oh well! I admire what they have done.
    Or, Google can retain me for a creativity seminar and I will inspire them with this business model.

  5. baha shabaneh says:

    do we just make movies and get money??

  6. Google will find a way to monetize any program, service, or system they run and have acquired over the years.

  7. Michael M says:

    Will my company is looking for the best way to raise the dollars I need to stay in business and to help start several new online business in the near future. I need to now how do you make money with youtube and Google as well.

  8. I think to make money in youtube and google is to make top of it in targeted keywords. now, the main problem is, how can you do it?..

  9. nywebdiva says:

    I want to know if you need an Adsense account on Google to make money on YouTube.
    I uhave a lot of hits on my videos and many subscribers and friends. I have to be about to make something from all this action.

    Does anyone really know the way?

  10. haba says:

    Thank. Smart a** . I’m looking for ideas and ways to get money with videos.

  11. Addy says:

    This is a really great blog, please keep up with all of your good and hard work and god bless!!!!

  12. Hadden says:

    Thanks for this blog and pelase be sure to keep it updated so I can keep coming back!

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