That YouTube (GOOG) so thoroughly dominates online video — but will only make $200 million in advertising revenue this year — stems from one fact: it only sells ads on the 4% of video uploaded by its semi-pro “partners” and media companies themselves.
How to increase that? Frequent YouTube critic Mark Cuban has a suggestion: Hire more people, manually screen all video for copyright infringement before it’s posted, and then sign advertising deals to turn more amateur producers into “partners.”
Cuban figures that through a combination of more people and YouTube’s existing technology, it could, in fact, review all the video uploaded to YouTube, and ultimately boost the amount of videos it can put ads on to 20%. That, Cuban figures, could increase revenue by $500 million.
Cuban has a point. But, as Citi’s Mark Mahaney has pointed out, videos with ads are already disproportionately popular — they accounted for 28 of the top 100 YouTube videos in May. So Cuban’s assumption — that YouTube could find plenty more non-infringing amateur videos good enough to sell to advertisers — might be overly ambitious.
Meanwhile, the downside to Cuban’s idea? By reviewing all video before it’s published, YouTube would end up turning away a lot more sketchy uploads — which made the site popular in the first place — and might lose market share. “Sometimes,” he says, “you have to decide between the crown and the cash.”
Google: We Can’t Figure Out How To Make Money On Web Video, Either
SAI Debate: How Much Money Can YouTube Make? Mark Cuban Vs. Citi’s Mark Mahaney
Citi: YouTube Can Generate $500M In 2009
Lehman: Another Kind-Of Bullish YouTube Revenue Estimate
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