In the world of Web 2.0, business plans are essentially simple: get as many users as you can now, and you’ll cash in on them later. While some may have laughed at Google’s $1.65 billion acquisition of YouTube almost a year ago, the fact remains that YouTube is the most popular video platform around and that having millions of eyes looking at you each day means there has to be some way to cash in from it.

As some reports (none officially confirmed yet) claim, YouTube will now offer a hybrid form of video advertising. For example, if you’re running a site about gadgets, you might want to display gadget-related YouTube videos on the site. Below the video there will be a graphic ad or a link. Someone clicks on the link, and money gets shared three-ways: between Google, the website owner, and the content provider.

Not all content providers that share videos on YouTube will automatically be enlisted in this program. Instead, only those that sign a consent form will be eligible, and for now over 100 video providers have enlisted, among them being TV Guide Broadband, Expert Village, Mondo Media and Extreme Elements.

An interesting side note: reading the early reports from AP and others I had trouble to grasp exactly how this new form of advertising will work. At first, I thought that YouTube will simply start bundling AdSense ads with the videos embedded on other sites. Although I was wrong, I still think that this approach would also make sense, and I think it shows that Google actually has an abundance of options of monetizing YouTube’s vast audience.

In any case, it will be interesting to see how the different parties in this deal will react. I expect that it should alleviate some of the lawsuit pressure off YouTube, since content providers will be able to make money from their content. We’ll probably see a lot more video ads on websites, which will give a new meaning to the phrase ‘ad hell’. Lastly, it’ll be fun to see what tricks will small, amateur content providers pull to try and create marketable content.

This entry was posted on Monday, October 8th, 2007 at 11:20 pm and is filed under News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.