Media Covers YouTube “Cracking Down” With “Placement Police”

MediaWeek wrote about the YouTube Placement police, and the NY Times picked it up. Seems YouTube isn’t crazy about being shut out of revenue when an adertiser and partner work directly. It’s a nice, balanced article (and I’m quoted in it, so of course I’ve got to blog about it). But I found one part interesting:

Tim Jones, COO of digital producer Animax Entertainment recognizes that some sort of revenue sharing model is inevitable. “YouTube should participate in revenue that is generated on their site,” he said. “This is something that would never happen in TV.”

I’m with Tom that a ‘win-win-win’ (advertiser-creator-distributor) is not only a “should” but a “will” happen. But I disagree with the television analogy, as there’s a non-trivial between a YouTube partner and a television (I mean, of course, besides the giant difference in quality).

YouTube, unlike a network, doesn’t own the content. It revenue-splits with the creators.

If Fred (the most popular YouTube Partner) promotes Budweiser in a video he shares on YouTube, then he shouldn’t “monetize” that video with random ads (and indeed as a YouTube Partner he can turn these off). After all, if I were Bud, I’d be pissed to see a Miller ad over my sponsored content. 

But this example isn’t the same as Coke running ads and product placement on American Idol (where, of course, Fox participates). The difference is that Fox owns American Idol, and YouTube doesn’t own Fred.

YouTube pays Fred (a percent of ad revenue that Fred generates with his content), and promotes Fred. In fact one could argue that Fred would never have happened without YouTube.  So Fred needs to respect YouTube… especially if YouTube fetched that hypothetical Bud deal.

Bud would surely support a Fred video with lots of media spending (to further amplify it). But is Bud obliged to write YouTube a check? I’m no attorney, but I think not. Although Fred might not be seen on the homepage again soon if he allowed that.

So how will YouTube play here? My hope is that they’ll help generate enthusiasm around sponsored content, then either find a way to facilitate it or at least allow it in a way that doesn’t harm them. For instance, have the video’s  sponsor (via the Partner) pay for the inventory that would have otherwise been filled by other sponsors. Or maybe they generate opportunities and take a cut of the revenue (but that’s not as easy as it sounds).

As a content creator, I want all video-sharing websites– YouTube and the rest– to feel comfortable promoting my videos without fearing that I’ll cut side deals that may hurt them.

And in the end, media spending does and will always far outpace branded entertainment/sponsored videos, and that’s where advertisers are more naturally going to play.

But in the meantime, YouTube is understandably trying to maximize income. It will be fascinating to see how it handles this area.

11 Replies to “Media Covers YouTube “Cracking Down” With “Placement Police””

  1. I wonder if this means YouTube will have dedicated staff that will be intermediaries for YouTube luminaries and brands. Better to have a positive, inclusive relationship with content creators rather than have staff dedicated to crushing enthusiastic, effective content creation.

    If this happens, what happens to Hitviews? Poptent? What happens if YT takes hold of these opportunities for webstars AND Pro Content? It seems to make sense to have staff dedicated to this.

  2. Kevin – nice post on this issue. There actually seems to be some additional complexity to the television model though as the network does not always own all rights to monetize the content. Many of these rights (licensing opportunities, off-air uses, and even on-air product placement) are retained to varying degrees by the production company (which in most cases is a wholly separate entity; in your example of American Idol, Fox is the network, but Fremantle Media is the producer).

    Producers like Mark Burnett have always been aggressive in securing the specific rights to integration revenues. The conflicts that you highlight above (i.e. a Bud integration with a Miller ad running alongside) are sources of constant scrutiny in the TV business with network ad sales teams trying to vigilantly protect their advertisers and production companies – at times – still trying to make supplemental deals on their own.

    How does this translate to YT? I think in much the same way. As YT continues to focus on promoting its popular partners, they’ll be give and take that won’t have black and white answers. Much like TV, creators that are driving big media buys may have more leverage in inserting and retaining integration revenues (assuming that they, and not YT, directly bring these advertisers to the table).

    Will certainly be entertaining to see how it all shakes out!

  3. I’d like to see Fred Drinking a Bud on You Tube.

    In fact, anyone who has the dithers to imitate and mock a drunken Fred in a stupor drinking Bud while ranting about You Tube and his fame would have an overnight viral hit! Admit it, you’re already laughing your ass off at the thought.
    Props all around.

    I should leave the topic there, buuuuuuuuut, and to keep it short, I think You Tube should pay everyone for uploaded original content regardless of numbers and popularity.

    Who makes these arbitrary rules anyway?

    You Tube makes money off the good will of up-loaders and exploits their stuff. You Tube is the middle man. I’m not saying they shouldn’t make ends meet or even profit some for being a wayside, but the public does own the infrastructure that allows them to braodcast, without they’d have nothing. Sure plenty would only be worth pennies, but pennies add up.

    As Ben Franklin said, a penny saved is a penny earned.

  4. I feel that my videos suck every bit as much as any other on YouTube! So why shouldn’t I get a cut of the ‘Sh*t Pie’? I want my check for $7.42!!

    Heck! I’ve bought so much Miller product over the years, I feel like I’ve single handedly put some kid named Miller at least part way through whatever snooty prep school they’re enrolled in. Give me a chance to recover a couple bucks! You listening Miller Brewing Company??

    Oh and @MDJ! Hurrah! Best wishes for a happy and peaceful life for you and Momma!

  5. Been thinking about this a lot recently, seeing as these ad dollars feed my children.

    A robust Youtube ad sales team could be an answer. Brands approach Youtube and buy both content and placement. The Youtube team plays the middle man and takes a cut….a reasonable cut that doesn’t discourage brands to play by the rules. This could get a little overwhelming, especially if Youtube is serving as producer and trying to coordinate the creative…so I still think there’s a place for a producer role, where a company like HitViews could supervise the creative (or even conceptualize the campaign), especially for young or inexperienced content creators who have a tough time delivering high-quality branded content consistently.

    If it’s a large company with a large campaign, there’s enough money to make everyone happy: creator, producer (if any), brand, and Youtube.

    But that still doesn’t address smaller companies who want one video and don’t have more than around $5-10K to experiment with. This is a pretty good portion of our clientele, and Youtube doesn’t need to discourage these smaller brands from entering the space. So, I would think that either a hands-off approach or a very reasonable fee (under $1000) would be acceptable for the smaller campaigns. If Youtube required a large fee (say 50%) for these smaller campaigns, the actual amount that we content creators made would dwindle to a place where we wouldn’t even make a video because it wouldn’t be worth it. And we can’t pass the fee along to the smaller company because it’s not in the marketing budget.

    As all these pieces fall into place, one thing comforts me. Ultimately, content is king, and none of these conversations could even take place if people weren’t serving up entertaining videos. When all is said and done, everyone is still going to be interested in a good video…and I like to think I make those 🙂

  6. I lost all focus as soon as I got to the part of “Tim Jones, COO of digital producer Animax Entertainment”. That made me think of Jim Jones, which made me think of Jonestown. Jonestown made me think of drinking Kool-Aid, which made me realize I’m thirsty right now. I think I’ll get me some juice. Mmmm… juice.

  7. This isn’t directly related, BUT what about channels like the VlogBrothers or TheAmazingAtheist who promote their products? Both of these channels amp up book sales through use of videos and I doubt they pay a fee to YouTube for posting their videos (although they might pay something for YouTube to promote their videos). Then there’s all the fans that promote products for free. In fact, Fred has favorited videos by fans who made videos about buying one of his shirts at Hot Topics. How is YouTube to know who is getting paid to promote a product and who’s doing it for free just because they are fans of the product? Book and movie reviews could also be seen as promoting a product and so I guess my point is that it would be hard for YouTube to draw a consistent line when it comes to product placement/promotion!

  8. @Rhett – Your sentiments echo mine almost exactly, except I don’t have a clientele.

    I do feel this is going to become up to YouTube and when they finally get a team involved with this, they are going to seem heaps more legit to our ad-buying masters.

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