About two years ago, Google (NASDAQ: GOOG) paid $1.65 billion for YouTube. The purchase is now starting to look like a poor decision.
According to The New York Post, "YouTube's numbers for 2008 don't look pretty: while 3 billion videos are viewed every month, revenues could total an anemic sub-$200 million this year."
Some analysts believe that the trouble with YouTube is that the videos are too short, or that it is difficult for marketers to figure out in advance which content will pull well with users. Those views are wrong.
The basic trouble with YouTube is that that video quality of 99% of the content is terribly poor. Source material for many clips comes from home video cameras or cellphones. None of that is of "production value." Putting ads that cost millions of dollars to create next to low-resolution content is a hard sell.
YouTube has a very basic problem. Most of its videos don't look good and a lot of them are barely watchable.
Douglas A. McIntyre is an editor at 247wallst.com.
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Reader Comments (Page 1 of 1)
7-06-2008 @ 2:05PM
frankie p said...
Why is the solution such a challenge? Include a 15 second video ad for youtube content longer than 30 seconds, and a picture ad for videos shorter than 30 seconds. Let's say my keywords are to see "Jerry Seinfeld." Have clickable banners to go to Seinfeld's website or NBC Universal or WMT's DVD section, etc. Banners do not cost millions and can be made in-house by GOOG, or just dump GoogleAds. Make the rates cheap, and raise the rates over time as they increase ad buys.
YouTube doesn't make nearly enough money because GOOG doesn't place nearly enough clickable ads for the opportunity to profit(http://www.youtube.com/watch?v=qY5AVBSjTAQ).
Even on videos where you broadcast yourself, have users check boxes for stuff they like, then they will have advertising on their vid's for the stuff they buy anyway. Now you get the stamp of approval from the youtuber along with the clickable ad.
I'm not short or long GOOG, although I am very surprised they're walking in circles before they finally take the direction everyone else sees.
GOOG shareholders should hope the company moves forward before YouTube is eclipsed by the next hot social site that will probably bring more features to cater to the natural progression of vblogging. Or maybe audio blogging (to make it more exclusive than podcasting) for those who remember the famed Buggles song, "Video Killed the Radio Star."
7-06-2008 @ 6:28PM
bird said...
Your 15 second wait for a video ad you don't want to see before most youtube content would kill the site. I imagine I'm typical, maybe not, but what I like about youtube is you hit the button and see the content unlike some site's i've been on where you wait for the ad and then see the content. I'm out of there almost immediately. An add to the side is OK and I've even heard the idea of a short overlay at the bottom of the video which would also be sort of OK if the content of the video I am trying to see is good enough to hold me. Please don't ruin youtube by running an add before the content plays. I create content for youtube and I can just see the plays plummit if people have to wait before they can even see what they are calling up, especially if they are just curious and don't know what they are fixing to see in most cases.
http://youtube.com/user/BirdYoumans