The Wall Street Journal has an article on the current state of YouTube and Google's plans (as owner of YouTube) to add pre- and post- video ads to all videos that they can verify as legitimate.
Sadly, the Wall Street Journal chose to put their article behind a subscription wall so I give you a quote from CNet instead...
Some of the other highlights in the Journal story:
• Google has identified 105 problems with YouTube's ad sales.
• Advertisers aren't willing to post their ads on many YouTube videos
• Because of legal questions, Google is only selling ads against video clips that have been approved by media companies and other partners, which, according to the story, is 4 percent of the total clips on YouTube. Think about the significance of that. Every minute more than 10 hours of video is uploaded to YouTube and only about 20 minutes is worth anything to the company.
YouTube has long been accused of being a warehouse for pirated material and media company, Viacom, filed a $1 billion copyright lawsuit against Google and YouTube. Google argues that the law doesn't hold it responsible for any illegal acts committed by users.
One of the books on my "personal favorites" list is "All The Rave: The Rise and Fall of Shawn Fanning's Napster"
The book purports to tell the behind the scenes tale of Napster 1.0 but really ends up telling the story of how Shawn Fanning's Uncle John squandered numerous opportunities to legitimize the service and eventually drove it out of business. Essentially John Fanning deceived himself into thinking he had the upper hand against the Record Industry which led him to reject several offers to work with them towards monetization.
Offers that would have been much cheaper than the current iTunes model for consumers (and which resemble Napster 2.0's current subscription service)
I suspect that Google, in its new found arrogance, is going down a similar path. Services like Hulu, which works with the TV networks to bring their content to the web, seem to be booming while YouTube Flounders. I think the reason for that is because Google refuses to admit what almost everyone knows which is that 99% of its business comes from copyrighted material that has been uploaded without the copyright holder's permission.
Instead they chooses to ignore that fact and try to make their money on the miniscule 4% of verified videos which is a losing proposition. What they should do is seek out copyright holders and say something like this...
"Look, we know your copyrighted material is being uploaded without your permission but the reality is there's nothing we can do to stop it. If we take it down it will just be uploaded again and if we go out of business tomorrow it will just be uploaded to a different video service. So rather than try to fight it let us help you to monetize the material (for a small cut of the profits of course)"
The above deal is identical to the one that Napster 1.0 almost reached with the Record industry and, had that happened, everyone would have been better off (cheaper for consumers, a bigger piece of the online pie for copyright holders).
I think the same deal would be perfect for YouTube but Google, the mighty king of online ads, has become too risk adverse to admit what is obvious and too arrogant to deal with copyright holders hat in hand. So it looks like they'll continue to drown in a sea of red ink while taking a complete loss on 96% of their output.
Either that or they'll just have to eventually give up on YouTube completely which would be a terrible loss for everyone.