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YouTube: Friend or Foe?

"YouTube Won't Cannibalize TV?"  Ha!  Funny one.  Actually, that's the title of a ZDNet blog post by Donna Bogatin.  She sounds as skeptical as I am about this.  Btw, be sure to read this YouTube article in the latest issue of Wired -- the Ball State sportscaster video cited in the article is highly entertaining.

The latest YouTube debate seems to be whether they can really introduce a more lucrative advertising model to their platform without alienating all their current users.  Although you see banner ads on the site, pre- and post-roll ads are thought to be the only way to truly monetize the traffic.  I disagree.  Why not simply reserve the top 20% or so of the video area itself for some sort of embedded banner advertising?  It would either overlay the video itself or push the screen down a bit.  YouTube could create an algorithm that splices in relevant ads on the fly, just like they do with AdSense today.  Besides the obvious benefit of not forcing people to wait for the "main attraction", it also presents the advertising message along with the content itself, likely leading to a much stronger impression.  It's just like all those crawlers you see on CNN and other cable networks -- we're so used to them that we don't really mind them anymore, but they represent an excellent piece of real estate for online video advertising.

Bogatin's blog post goes on to talk about how YouTube really lends itself to "short bursts of content" rather than full-length shows.  That's true today but I seriously doubt it will be a long-term limitation.  Why couldn't YouTube host 20-, 30-minute (or longer) videos?  My attention span while I'm online does seem to be shorter than when I'm watching TV, but not by much.  We'll definitely see longer videos on YouTube in the future, especially once they get that advertising model in place.

I also expect to see an explosion of custom channels on YouTube.  You'll have channels for every niche imaginable.  That will also lead to more video links being embedded in blogs and other websites.  For example, if there was a good publishing/media channel on YouTube I'd be interested in including a widget-like link to it from my blog.  Again, the advertising model comes into play.  Think of Google's AdSense, but for video.  If you insert a custom channel on your blog, everyone who clicks and watches a video contributes to your income.  I tend to think the click-through rate for that sort of object on the screen would be much, much higher than the click-through rate for the typical AdSense block.

If you're in the TV/video business and you're not working on a strategy to either work with or compete with the Google/YouTube juggernaut, you're kidding yourself.  They're coming and they have all the weapons to be very successful, at your expense.


Kevin Hood

I completely agree with you regarding the youtube explosion and your ideas. I think others can somehow capitalize on it in some niche or local fashion...but they better do it quickly.

The Ball State video you linked to was a lame spoof on this REAL BSU video. It is a must see! It appeared on network TV on one of those blooper shows. (I went to Ball State - what is Letterman wasting all of his money on? ha!)

Joe Wikert

Hi Kevin. Thanks for the clarification and correction.

Matt Metzgar

I think youtube is one of the best entrepreneurial ideas I've seen in years. I knew within 30 seconds of looking at it that it would be successful.

I'm not sure youtube will replace tv, but I expect to see websites of the major networks hosting more video over time.

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