YouTube set to sell video ads

Now that YouTube has been sued by Viacom (NYSE: VIA) for $1 billion charging copyright infringement, Google (NASDAQ: GOOG) figures it is time to make some money on the video sharing site. It will begin to sell video ads that will run on the bottom 20% of the screen on content provided by its partners. They will get a share of revenue. According to (subscription required) The Wall Street Journal, viewer can close the ad or watch the entire commercial.

Google claims that the ads have astonishingly high "click through" rates, a key measurement of whether consumers want to see the market message of an advertiser. The company puts the figures at five to ten times those of standard display ads. If so, YouTube would stand to draw a large number of advertisers to the program.

But, there is one considerable drawback. A look at YouTube indicates that much of the most-watched content is still produced by users and not companies with premium content. That being said, the inventory for video ads may be more limited than Google is letting on.

The site was started as a video sharing destination for amateurs. While that culture drives most of the content for the property, it commercial success may have limits.

Douglas A. McIntyre is a partner at 24/7 Wall St.