June 30, 2008 64 Comments

YouTube is Losing Hundreds of Millions a Month

Think about this, oh followers of the Cult of Chad: where do YOU go to remember old TV clips, to find out what your favorite bands from high school and college sound like these days, the trailer for that new movie? YouTube, right? It’s easy. It’s right there. Powerful search, billions of videos, and nothing too tricky to watching one. And yet, I think they’re missing out on hundreds of millions of dollars a month. Here’s how.

Affiliate Sales

I went searching for the mashup David Usher’s Kill the Lights single mixed with the new Batman Dark Knight movie trailer. (By the way, Google threw out a Mitch Joel link before even YouTube – good Google juice, Mitch!) I wanted to watch this:

(Go on, watch it. I’ll wait.)

Now, what should come next? I’ll tell you what: YouTube should have a sidebar to that video (legality questions aside) that says, “Why not buy David Usher’s new album?” with an easy click to an Amazon store or whatever. And what else? “Why not pre-order the Batman DVD?” Why not? I’m already turned on by the song and the video. I’m already hopped up, and it’s like free marketing for two products that didn’t spend a dime to get me excited!

There are lots of ways this makes sense. It’s right there: market, interest, pre-selection.

Okay, YouTube: ready, steady, go! Go make money. I’ll be here watching more weird Batman things:

(What do you think? Good idea? Bad idea?)

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  • Wedge

    Yes, even if they simply became Amazon Affiliates (much like Google Books) they’d make a killing.

  • Wedge

    Yes, even if they simply became Amazon Affiliates (much like Google Books) they’d make a killing.

  • http://www.nielsbom.com Niels Bom

    True…Google is fumbling the ball on this one.

  • http://www.nielsbom.com Niels Bom

    True…Google is fumbling the ball on this one.

  • moskowitz

    bandwidth is currency … turn scarcity upside down and focus on “recognition” … willingness to pay is tough to measure … just not that tough … Google does it Amazon wants to do it … two cents

  • moskowitz

    bandwidth is currency … turn scarcity upside down and focus on “recognition” … willingness to pay is tough to measure … just not that tough … Google does it Amazon wants to do it … two cents

  • http://www.jimkukral.com/ytbiz Jim Kukral

    Chris, yep. Youtube is missing out on a lot of cash. I aruged last week in my manifesto about how they’re losing 1.2 BILLION a year in lost “business” revenue. Click my name for the link with video. Compelling I think.

  • http://www.jimkukral.com/ytbiz Jim Kukral

    Chris, yep. Youtube is missing out on a lot of cash. I aruged last week in my manifesto about how they’re losing 1.2 BILLION a year in lost “business” revenue. Click my name for the link with video. Compelling I think.

  • http://www.febland.net/ Znethru

    Unnecessary IMHO yoho – anyone interested in buying anything can do so easily via alternative routes.

  • http://www.febland.net/ Znethru

    Unnecessary IMHO yoho – anyone interested in buying anything can do so easily via alternative routes.

  • http://redescolaborativas.blogspot.com/ Marcos Fargas

    Yes, it´s true, the segmentation it´s done.
    In Spain our Youtube it´s http://www.dalealplay.com, but since December they need money so they have put too much ads, and not segmented (it´s a shame).
    I think the consumer it´s ready for links to Amazon or ebay, maybe it´s dificult to manage this segmented advertising. I sugest a tool like Google Adwords, but for Youtube, with approval from Youtube team.

    Marcos Fargas
    http://redescolaborativas.blogspot.com/

  • http://redescolaborativas.blogspot.com/ Marcos Fargas

    Yes, it´s true, the segmentation it´s done.
    In Spain our Youtube it´s http://www.dalealplay.com, but since December they need money so they have put too much ads, and not segmented (it´s a shame).
    I think the consumer it´s ready for links to Amazon or ebay, maybe it´s dificult to manage this segmented advertising. I sugest a tool like Google Adwords, but for Youtube, with approval from Youtube team.

    Marcos Fargas
    http://redescolaborativas.blogspot.com/

  • http://lizkdc.typepad.com Liz Kelleher ~ lizkdc

    Tend to agree. Example: imeem. Until recently, could not be bothered with them as Youtube and iTunes between them tended to satisfy my “heard of something cool, go check it” impulses.

    The way they’ve got the handy “buy it from either iTunes or Amazon” feature (plus higher quality files) is gradually sucking me over to them more often if Google turns up both a YouTube and an imeem choice.

  • http://lizkdc.typepad.com Liz Kelleher ~ lizkdc

    Tend to agree. Example: imeem. Until recently, could not be bothered with them as Youtube and iTunes between them tended to satisfy my “heard of something cool, go check it” impulses.

    The way they’ve got the handy “buy it from either iTunes or Amazon” feature (plus higher quality files) is gradually sucking me over to them more often if Google turns up both a YouTube and an imeem choice.

  • http://cloudiD.com david usher

    hey chris
    i totally agree.
    there is such a great opportunity for everyone. we would all win. another song of my songs, ‘black black heart’ became a favorite of the anime world and there must be a hundred different anime videos cut to that song on youtube. ahh if only there was a buy button! now multiply that by all the youtube videos that use music or picture…

  • http://cloudiD.com david usher

    hey chris
    i totally agree.
    there is such a great opportunity for everyone. we would all win. another song of my songs, ‘black black heart’ became a favorite of the anime world and there must be a hundred different anime videos cut to that song on youtube. ahh if only there was a buy button! now multiply that by all the youtube videos that use music or picture…

  • http://leemckusick.com/blog Lee McKusick

    I would have to agree also.
    I wouldn’t mind a some links like that over in the sidebar, as long as they’re no glaringly ugly or overly obtrusive. Put something subtle, but clear, and I think we’ve found what the ??? before the Profit is. =)

  • http://leemckusick.com/blog Lee McKusick

    I would have to agree also.
    I wouldn’t mind a some links like that over in the sidebar, as long as they’re no glaringly ugly or overly obtrusive. Put something subtle, but clear, and I think we’ve found what the ??? before the Profit is. =)

  • http://www.99daz.com Darren Daz Cox

    that sounds logical to me….

  • http://www.99daz.com Darren Daz Cox

    that sounds logical to me….

  • http://chrisbrogan.com chrisbrogan

    Well, there we go. : )

  • http://chrisbrogan.com chrisbrogan

    Well, there we go. : )

  • http://www.twistimage.com/blog Mitch Joel – Twist Image

    I’ve argued for a long time that “content is media” and getting people “in the mood” is the way to run it – always. I think the better question is, “why wouldn’t YouTube just try it and let us know?”

    No harm. No foul. If no one wants to buy anything, there’s nothing disruptive and if they do… it’s easy.

  • http://www.twistimage.com/blog Mitch Joel – Twist Image

    I’ve argued for a long time that “content is media” and getting people “in the mood” is the way to run it – always. I think the better question is, “why wouldn’t YouTube just try it and let us know?”

    No harm. No foul. If no one wants to buy anything, there’s nothing disruptive and if they do… it’s easy.

  • http://shannonehlers.com Shannon Ehlers

    Hey Chris, good thought-provoking stuff here!

    I had to chime in with my $0.02 – always willing to stir the pot, this time, I’ve supplied a dissenting opinion.

    It’s not that I disagree with your premise – they ARE missing out on some money, but is that such a bad thing? The same can be said for Feedburner, Reader, Gmail, and so many other free services (or ad supported services) available thru Google.

    There’s a huge opportunity to make money on many of these by serving up alternate content, by hooking users up with related service providers, by tabulating user data and reselling it (they wouldn’t, would they?!), on and on. But eventually it could get, oh, how to say… spammy.

    Maybe it just boils down to how “in your face” you make it. As you and others have indicated, there are those of us who would truly appreciate the opportunity to at least consider purchasing related merchandise. However, there are also those “academic purist” types who would feel put upon by such tactics.

    One of the things that makes YouTube so cool is that it is simple, just videos in an easy viewer and a way to share. There are ads, of course, but they are unobtrusive. Same with Feedburner – many of us derive value from the many facets of Feedburner without fees. These are just two examples and Google provides many others (Grand Central, Blogger, and Picasa for instance).

    Could Google derive some income by cleverly combining purchase opportunities with these services? Certainly. Would it weaken the sense of community that brings many of us back again and again, ultimately weakening Google’s brand? Maybe. Are these monetization schemes part of their core capabilities? I don’t know.

  • http://shannonehlers.com Shannon Ehlers

    Hey Chris, good thought-provoking stuff here!

    I had to chime in with my $0.02 – always willing to stir the pot, this time, I’ve supplied a dissenting opinion.

    It’s not that I disagree with your premise – they ARE missing out on some money, but is that such a bad thing? The same can be said for Feedburner, Reader, Gmail, and so many other free services (or ad supported services) available thru Google.

    There’s a huge opportunity to make money on many of these by serving up alternate content, by hooking users up with related service providers, by tabulating user data and reselling it (they wouldn’t, would they?!), on and on. But eventually it could get, oh, how to say… spammy.

    Maybe it just boils down to how “in your face” you make it. As you and others have indicated, there are those of us who would truly appreciate the opportunity to at least consider purchasing related merchandise. However, there are also those “academic purist” types who would feel put upon by such tactics.

    One of the things that makes YouTube so cool is that it is simple, just videos in an easy viewer and a way to share. There are ads, of course, but they are unobtrusive. Same with Feedburner – many of us derive value from the many facets of Feedburner without fees. These are just two examples and Google provides many others (Grand Central, Blogger, and Picasa for instance).

    Could Google derive some income by cleverly combining purchase opportunities with these services? Certainly. Would it weaken the sense of community that brings many of us back again and again, ultimately weakening Google’s brand? Maybe. Are these monetization schemes part of their core capabilities? I don’t know.

  • http://www.goinspired.com Chester Chen

    Thanks for sharing the hilarious video.

    Anyway, I think Youtube should hire you. ;)

  • http://www.goinspired.com Chester Chen

    Thanks for sharing the hilarious video.

    Anyway, I think Youtube should hire you. ;)

  • http://www.ehow.com/video_2287260_handle-youtube-downloader.html youtube downloader

    Anyway,if there is really a good video,I can accept some ads.

  • http://www.ehow.com/video_2287260_handle-youtube-downloader.html youtube downloader

    Anyway,if there is really a good video,I can accept some ads.

  • wanjia

    Yes,really great idea!Youtube may earn money now if they use this idea

  • wanjia

    Yes,really great idea!Youtube may earn money now if they use this idea

  • http://www.alternativestereo.com justin gough

    Its my understanding that google “can’t know” what its users upload and it protects them from being sued for copyright violations. Although a similar site, hulu.com can target ads because they have less content and less views, but have secured all copyrights to distribute.

    Although we know there is a screening process die to the fact that youtube has no porn on their site.

    That’s just what I’ve heard about targeted ads on youtube

  • http://www.alternativestereo.com justin gough

    Its my understanding that google “can’t know” what its users upload and it protects them from being sued for copyright violations. Although a similar site, hulu.com can target ads because they have less content and less views, but have secured all copyrights to distribute.

    Although we know there is a screening process die to the fact that youtube has no porn on their site.

    That’s just what I’ve heard about targeted ads on youtube

  • http://getinternetmarketingstrategies.com/2008/07/what-is-your-landing-page-doing/ What is Your Landing Page Doin

    I totally agree with, this is really a no-brainer, but obviously someone is missing a few neurons over at YouTube.

    To not take advantage of that massive traffic is really LAME!!!

    Interesting post, thanks!

  • http://getinternetmarketingstrategies.com/2008/07/what-is-your-landing-page-doing/ What is Your Landing Page Doing?

    I totally agree with, this is really a no-brainer, but obviously someone is missing a few neurons over at YouTube.

    To not take advantage of that massive traffic is really LAME!!!

    Interesting post, thanks!

  • http://chrisbrogan.com chrisbrogan

    @Shannon – but YouTube is an entertainment channel, whereas everything else you’ve pointed out is a utility. Context. In my mind, YouTube is a place where you’d expect a service that complements the entertainment.

  • http://chrisbrogan.com chrisbrogan

    @Shannon – but YouTube is an entertainment channel, whereas everything else you’ve pointed out is a utility. Context. In my mind, YouTube is a place where you’d expect a service that complements the entertainment.

  • http://www.joebuddejr.com Joe Budde Jr

    In lieu of promoting purchasing more content(which the viewer just got for free via YouTube, hulu, or whomever), content creators, and content advertisers the target is the high revenue and high ROI channels:

    Concerts and merchandise. (this is something that Disney and the likes of Hannah Montana do so well)

    Skip the Amazon affiliate program and head straight to concert ticket affiliate programs, merchandise, bobble heads for crying out loud! Who doesn’t want a bobble head of David Usher? I know I do!

    Content ‘owners’ should use the content to drive the consumer to products with higher margins.

    It really ties in to a post I wrote about whether content is the means or the ends when generating revenue.

    What do you think content’s purpose is while generating revenue?

  • http://www.joebuddejr.com Joe Budde Jr.

    In lieu of promoting purchasing more content(which the viewer just got for free via YouTube, hulu, or whomever), content creators, and content advertisers the target is the high revenue and high ROI channels:

    Concerts and merchandise. (this is something that Disney and the likes of Hannah Montana do so well)

    Skip the Amazon affiliate program and head straight to concert ticket affiliate programs, merchandise, bobble heads for crying out loud! Who doesn’t want a bobble head of David Usher? I know I do!

    Content ‘owners’ should use the content to drive the consumer to products with higher margins.

    It really ties in to a post I wrote about whether content is the means or the ends when generating revenue.

    What do you think content’s purpose is while generating revenue?

  • http://shannonehlers.com Shannon Ehlers

    Chris,
    Yes you make a good point, of course. I basically am in agreement. Especially if it truly is a service to the user (adding value).

    The exception for me is that I can envision a slew of video spam professionally designed for high rank and basically published as ads, thus diluting the entertainment value available and requiring us to further sift and parse to find the nugget (Lord knows there is already enough crap there).

    -Shannon

  • http://shannonehlers.com Shannon Ehlers

    Chris,
    Yes you make a good point, of course. I basically am in agreement. Especially if it truly is a service to the user (adding value).

    The exception for me is that I can envision a slew of video spam professionally designed for high rank and basically published as ads, thus diluting the entertainment value available and requiring us to further sift and parse to find the nugget (Lord knows there is already enough crap there).

    -Shannon

  • http://chrisbrogan.com chrisbrogan

    Shannon – great point. The potential for video spam is high. Ugh. I guess that means a Greasemonkey script would come up.

  • http://chrisbrogan.com chrisbrogan

    Shannon – great point. The potential for video spam is high. Ugh. I guess that means a Greasemonkey script would come up.

  • http://gregrollett.blogspot.com Greg Rollett

    As long as it is not obtrusive to my viewing. I love the idea, but no company of YouTube’s magnitude has shown me that they can do this without getting in my way. A simple “buy” link that floats to a YouTube branded landing page with related Amazon items might work, in that I wanted to go there. Otherwise I’ll just keep clicking my way into 4 hours of life that I can never get back.

  • http://gregrollett.blogspot.com Greg Rollett

    As long as it is not obtrusive to my viewing. I love the idea, but no company of YouTube’s magnitude has shown me that they can do this without getting in my way. A simple “buy” link that floats to a YouTube branded landing page with related Amazon items might work, in that I wanted to go there. Otherwise I’ll just keep clicking my way into 4 hours of life that I can never get back.

  • http://khyros.com David Kowarsky

    Chris-

    Sounds great, and Pandora is a great implementation of this kind of thinking, but there is no UGC there.

    To adapt the oft used metaphor from L&O, this kind of monetizing would be fruit from of the poison tree, wouldn’t it? If Youtube was aware, even automatedly, that this was copyrighted material, the legally responsible course of action is to demand proof from the poster that they are the copyright holder and/or simply suspend the account since it’s unlikely to be the case. Making money off it directly (click here to give us money for something illegal one of our users did) would probably get them sued. IANAL, but it seems more than a little thorny.

    -Dave

  • http://khyros.com David Kowarsky

    Chris-

    Sounds great, and Pandora is a great implementation of this kind of thinking, but there is no UGC there.

    To adapt the oft used metaphor from L&O, this kind of monetizing would be fruit from of the poison tree, wouldn’t it? If Youtube was aware, even automatedly, that this was copyrighted material, the legally responsible course of action is to demand proof from the poster that they are the copyright holder and/or simply suspend the account since it’s unlikely to be the case. Making money off it directly (click here to give us money for something illegal one of our users did) would probably get them sued. IANAL, but it seems more than a little thorny.

    -Dave

  • http://qwidget.com/blog mike

    hey chris,
    i like your idea a lot. definitely got me thinking. however, one issue popped up in my mind. if youtube did this affiliate strategy would that lower the value on the other inventory on the site? Not sure on this one. but i could see one of their in video advertisers getting upset if there were an amazon link distracting users from their ad. especially because the affiliate ads would be tempting for many users. the obvious retort to this is that if more users were clicking on affiliate ads, google would make more money. but maybe google doesn’t want to make money for amazon. or maybe they are building some other strategy that would conflict with this affiliate idea. nevertheless, your thinking is really provocative.

  • http://qwidget.com/blog mike

    hey chris,
    i like your idea a lot. definitely got me thinking. however, one issue popped up in my mind. if youtube did this affiliate strategy would that lower the value on the other inventory on the site? Not sure on this one. but i could see one of their in video advertisers getting upset if there were an amazon link distracting users from their ad. especially because the affiliate ads would be tempting for many users. the obvious retort to this is that if more users were clicking on affiliate ads, google would make more money. but maybe google doesn’t want to make money for amazon. or maybe they are building some other strategy that would conflict with this affiliate idea. nevertheless, your thinking is really provocative.

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