Yeah, you make a good case. I can't really argue back any more than just to say that I was - probably naively - basing my impressions on an assumption that Google knows what it's doing as far as advertising is concerned, being impressed by their $20+bn/yr ad revenues. I'd never really considered that Google would be GM-like in their handling of an important property like YouTube: handling it incompetently, not understanding the potential online video advertising market, not seeing the real opportunities, not giving YouTube the resources they need. I had assumed that they're trying their absolute hardest not to lose half a billion dollars and that they haven't been able to make it work yet. But perhaps you're right and they are indeed shackled by a GM-like existing situation with YouTube and don't know how to fix it.
And you're also right that I hadn't considered that YouTube would just end because it doesn't work - as the third most popular website, and something that Google paid $1.7bn for, I didn't see that coming about any time soon. But with these kind of losses, maybe it will. Unless they can find another way to fund all that bandwidth from those tiny amounts of viewers that advertisers aren't interested in - bandwidth that they're already paying well below market rate for. I wasn't talking about Micropayment systems for direct payment, though - I was talking about the kind of dollar payments that people pay for media in places like the iTunes store. And I see that you're saying it's just a problem with YouTube, not with online video, and that some of the best and most ready-to- monetize content isn't on YouTube. I don't know what that content is, and I'd assumed that the vast majority of the most monetizable commercial online video is published on YouTube as well as wherever else it might go, just to capture the audiences. So I didn't really understand the difference between the most monetizable online video and YouTube. But you're probably right, there are probably lots of other options that I hadn't considered which mean that advertising in online video will suddenly become very successful and ubiquitous and pay per view won't become the dominant model for funding it all as I'd suggested. And maybe, to follow on from Jay's post about Time Warner as ISP and content creator, there are all sorts of other ways that we will end up paying for all this data that we've hitherto thought of as free. Rupert http://twittervlog.tv On 8-Apr-09, at 6:09 PM, J. Rhett Aultman wrote: > > > >> ads don't work with ephemeral content. > > > > Surely that's exactly where they do work? Most of the media we > > consume is ephemeral - TV, newspapers, online news, we see adverts > > alongside those things as they stream into our lives. On-demand > > video is largely different from that, isn't it? it's short and self- > > contained and chosen individually and unlike TV and news, it's not > > time-sensitive - it's actually less ephemeral. > > No; it's actually more ephemeral when you consider it from a > position of > total impact. The overwhelming majority of YouTube videos reach tiny > numbers of viewers who consume it once. This bears no comparison to, > say, > TV or newspapers, which reach much larger audiences. It also bears no > comparison to media where there are smaller audiences that accept > repeat > exposure. Such media are ripe for targeted product placement. > > But most YouTube videos simply don't make good raw material for an ad. > The audience is small and not defined, the video will be seen once per > viewer (who may not even make it the majority of the way through), the > producer isn't available to exploit their relationship with the > viewer to > endorse things...it's basically an advertising void. > > > But most of it - 97% apparently - is unmonetizable with advertising, > > because individual videos' viewing figures are too low - and maybe > > it's all too fragmented and uncategorizable, and perhaps advertisers > > are not prepared to see their adverts up against every little home > > video and copyright-infringing clip. Even if those things eventually > > collectively gather millions of views and last for a lot longer than > > most ephemeral advertising-funded media. > > Again, consider "ephemeral" from a standpoint of overall cultural > staying > power, and not just from how long something is on a screen once, and > you'll see that the YouTube videos are culturally ephemeral. You > actually > touch on that issue in your above paragraph. > > > According to Credit Suisse, YouTube seems to be making $50-100m from > > ads in videos, adjacent banners and sponsored videos. That's as good > > as they can do all year, and they have 40% of the total online video > > market worldwide, at a time when online video is booming? > > Right, and this is because they're monetizing wrong. Let's say that > 40% > of the car market, in terms of cars on the road, was GM's, and GM was > found to be losing money badly. In reality, it's because GM loses $1 > per > car they sell because they do everything wrong. Is it valid to ask if > cars as we know them will be viable? No. It's not that cars aren't > viable. It's that GM is doing it wrong. > > > Sure, online viewership is tiny compared to TV, but the gap > between TV > > and online video advertising seems to be disproportionately large. > > This could have everything to do with a casual numbers game not > showing > the real details. > > > Especially when you'd imagine that online video would provide > greater > > opportunities for more targeted "addressable" advertising, > supposedly > > the holy grail. > > Imagination isn't reality, though, and presupposition gets you > nowhere. > If YouTube isn't doing this sufficiently, then they're losing money. > > > But the TV ad industry in the US alone is worth $80 billion, 60% of > > total advertising spend. Superbowl ads this year earned NBC over > > $200m - that alone is perhaps between 2 and 4 times as much as > > Google's making all year from YouTube video ads. > > Of course, it's distorting to use the SuperBowl in a good comparison > here, > because it's well known that the SuperBowl is basically tulip season > for > advertisers. People spend on those ads because they exist. It's > similar > to how city after city hosts an Olympic Games but never profits on the > venture. > > That said, I understand where you're trying to go with this, but you > keep > treating this as a problem with online video when, in fact, it's a > problem > with YouTube. Your assumption is that, if YouTube can't do it, nobody > can. That itself only makes sense if you can prove that the only > people > capable of doing it are YouTube and what supporting engineers Google > gives > them. > > > Is online video really that unattractive to advertisers? How is that > > going to change? It seems to me that at the moment, short on-demand > > online videos are more attractive to the viewers than the > advertisers, > > and therefore that viewers are likely to pay more for them directly > > than advertisers would. > > Again, it's not about online video. It's about different classes of > video > requiring different monetization processes. A huge class of online > video, > which I'd estimate as the overwhelming majority of YouTube videos, is > completely worthless at making money. > > As for why micropayments won't work, I'll defer that to Clay Shirky, > who > said it far better than I ever could: > > http://www.shirky.com/writings/fame_vs_fortune.html > > > At the moment, they don't have to make the choice, because 40% of > the > > market is being subsidized by Google at a cost of $500m. No other > > business could sustain that kind of loss. That's what I mean about > it > > distorting the market. And if that subsidy disappeared tomorrow, > > surely something would have to pay for the huge costs of bandwidth > and > > content in delivering all this video to people? Will that be > > advertising? Or pay per view? Judging by the stats so far, my money > > would be on pay per view, not advertising. > > My money would be on an option that you don't seem to consider-- that > YouTube would just end, and that people interested in delivering > online > video would have to pay their own hosting. The end result will be > that we > will still have the artists, producers, video bloggers, etc, but what > we'll lose is the endless archives of cellphone videos of someone's > drunk > friend falling down or of some random person in London getting > stoned and > lecturing everyone on history...then getting all the facts wrong. > > > But again, that's just a broad personal impression from very little > > knowledge or experience. I am just a layman. > > I'm just a layman, too, but I just trying to impress on you that > there may > be more options out there than the handful you're bringing to the > table. > To wit: > > * Online video can sometimes be monetized and sometimes not, just like > online text. > * YouTube has a model that doesn't maximize money over time. > * If Google doesn't want YouTube to be a loss leader, a possible > outcome > is that YouTube will end but that online video, as a medium, will > survive. > Plenty of good video already survives without YouTube. In fact, some > of > the best and most ready-to-monetize content isn't on YouTube. > > -- > Rhett. > http://www.weatherlight.com > > > [Non-text portions of this message have been removed]
