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.