Wednesday, July 9, 2008

What YouTube Should Do To Generate More Revenue

YouTube Falls Short Of Expectations The Wall Street Journal, July 9th, 2008

Today’s WSJ reported that YouTube fell far short of their revenue expectations, with growing concern about the future.

To generate the additional revenue needed to exceed future expectations, YouTube must extend its model by allowing its content to leave their servers, and let users take copies of their favorite videos with them, save them on their hard drive, and share them directly with others using peer to peer services, social nets, email and instant messaging-- all while YouTube and related content owners retain control, metrics, and monetization. This simple extension will benefit their USERS, CONTENT OWNERS, YOUTUBE, GOOGLE, and the ENTIRE DIGITAL MEDIA SPACE.

The Benefits to Users: YouTube users want their videos. They want to play them over and over again. They want to be the first to find them. They want to be the first to share them. They want recognition and rewards for these actions. By being able to put their favorite videos into a secure digital container they get all of these benefits, can share in the enhanced revenue streams (content owners and influencers alike) while enhancing their user experience, and bringing their YouTube life into the other online circles including work, hobbies, social nets, and offline entertainment.

The Benefits to Content Owners: Content owners, whether professional or amateur, can now enjoy even greater viewership, and share in the additional revenue streams afforded by distribution in secure digital containers. Content owners get lower cost of distribution (less server farms and fat pipes), infinite distribution (files never die), intelligent distribution (within pre-existing groups), and trusted distribution (from a friend). Content owners also get greater revenue from increased views (online and off), higher CPM (based on enhanced user/path metrics), and tie-in merchandise transaction revenue.

The Benefits to YouTube: YouTube will better leverage its high resolution premium content and generate substantial new revenue streams for all content with additional views and viewers, along with increased CPM rates, while extending the reach and life of its content, engendering greater user loyalty, and attracting net-new users. New platforms for advertising, better brand penetration into social nets, off-line views, merchandising tie-ins, and transaction revenue all add to the bottom line.

The Benefits to Google: By sharing advertising and related monetization capabilities enabled by the superdistribution of their videos with the content owners, Google can begin to monetize the 96% of YouTube videos that it currently ignores. This system would provide Google additional platforms for selling advertising, additional inventory (now can include more licensed content), increased distribution, higher CPM rates, longer product life, and extension of the Google/YouTube brands into new avenues of distribution.

The Technology behind this EXISTS TODAY: This system could be deployed in Beta in less than 60 days, by leveraging existing software and services in the market today. By working with Digital Containers existing software, YouTube could provide all of the above results, and a platform for future growth. A Digital Container works by cryptographically sealing content, and linking it to onboard metrics and monetization engines. As a stand-alone file (.swf format), it then flows freely across the net to any device (computer or phone), by any means available (eMail, RSS, BitTorrent, LimeWire, thumb drive, IM, social network, etc.). As soon as a user begins to interact with it, the metrics engine kicks in allowing for dynamic advertising placement, and the onboard rules engine then determines what can be done with the content, based on the owners (YouTube and creators, jointly in this case) dynamic rule-base. When the container is passed along, the process starts anew, and the metrics engine remains aware of the path taken. This allows for ‘superdistribution’ revenue models, where recommenders are rewarded for success. The container has its own secure player, but first looks for user preferences, and then securely ‘serves’ the content to their player of choice.

With Google’s recent announcement teaming with Adobe regarding the indexing and discovery of .swf files via search, users will be able to find their videos when they are posted on other sites…again, always maintaining the Google/YouTube brands.

Instead of milking the old ad models until they run dry-- it’s time for more innovation and growth!

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