YouTube Goes Long

YouTube began as a bit of a Wild West of online video, but soon settled down to become the number one site for short, user-generated clips in the world. Mainly under Google’s ownership and tutelage.

But it has recently been trying to add more professional, long-form content as well. Some old movies and TV shows are now available on the site, and in the U.K. it has recently inked a deal with Channel 4 to have its archive of programming added to the site.

However, while Channel 4 is happy to sell its wares to YouTube for advertising revenue (alongside 4oD), most content creators and television networks aren’t so ready and willing to license their content. At least not merely for a share of advertising revenue.

Cue alternative revenue models.

Revenue Options

In September we reported how movies could be coming to YouTube, offered on a $3.99 rental basis similar to the standard set by Apple iTunes.

Then just a few weeks ago we reported how TV shows could also be added to the mix, with YouTube charging $1.99-per-episode.

This wouldn’t be going against the grain as Hulu is almost guaranteed to be preparing to charge for some content, while Apple is thought to be considering a $30-a-month eat-all-you-can subscription plan.

Subscription Plans

And now, according to Reuters, Google’s vice president of content partnerships, David Eun, has paved the way for YouTube to start a similar plan.

He said:

“We’re making some interesting bets on long-form content; not all content is accessible to us with the advertising model.”

In which case YouTube would like to offer content partners the option which works best for them. So the ones who are happy to take a share of the advertising revenue generated on the site can do, with others being able to opt for alternatives.

As well as rentals and downloads, monthly subscription fees are being considered. Which would put YouTube in direct competition with Cable companies.

Conclusions

This kind of deal would make sense for content creators and television networks which can see the future is in online video but which doesn’t want to give up the right to make a ton of money on licensing content.

The danger for YouTube is trying to be everything to everyone. And the site could end up cannibalizing itself by not focusing on one particular aspect of online video. Which until now has been short-form UGC.

It has a platform that is connecting forward thinking companies wishing to utilize the reach of online video with various blogs, websites and social media platforms.

Put simply if you have a video that you want to get more exposure and views on YouTube then ShareThrough can help. It does this by getting your video on popular websites and apps to get it more exposure, for a price of course.

On the other side of the coin if you run a popular website, blog, facebook app, iPhone app etc. that could show sponsored videos to users to get more plays, then there’s the opportunity to partner with Sharethrough as an advertiser.

Does it Work?

I had the pleasure of visiting the ShareThrough offices in San Francisco where founder Dan Greenberg highlighted how the video campaigns work.

In addition to running webtvwire.com I occasionally consult on online video promotion. I was impressed with how ShareThrough works, and that it is actually effective, especially on large budget campaigns, although low budget campaigns might not see the benefit (more on this in a minute).

Examples of ShareThrough’s successful videos it has promoted on behalf of advertisers include a movie trailer, a fearlessweb video, and a Christmas themed Motorola ad. Between them they’ve had a few million views.

Sharethrough has managed to bridge the gap between those sites and apps able to give viral videos exposure, and advertisers that will pay for such exposure. Up until now it’s been difficult for a company to get guaranteed exposure for their video campaigns with a simple out of the box solution.

Hot Videos & Seeding

One of the strategies that is very important in making a video go viral is what I call ’seeding’. You plant the seeds for your video to blossom into a viral hit.

It doesn’t matter how good your video is if nobody sees it, so seeding ensures your video gets off the ground and sets the viral wheels in motion. Once a video reaches a ‘viral threshold’ it starts to get picked up by blogs, shared on Facebook, promoted on reddit and digg, emailed to friends etc. etc.

I use a variety of cost-effective techniques to ‘viralize’ a video, some of which are listed here, and using ShareThrough is one of those that could be added to the mix.

Expensive?

However, just to get a video off the ground you can need a lot of views. The viral threshold varies for each video depending on a few factors, namely how much people like it – the more they like it the more they share.

This can be anything from 5,000 views to 100,000 views depending on the video and where those views are from. So if your budget is limited then using ShareThrough can get expensive, and may not be effective at creating a viral hit if your budget runs short.

Prices per video play start at $0.05 for worldwide traffic, and $0.25 per play for U.S traffic. This can quickly add up with 10,000 U.S viewers costing you $2,500.

Expensive is a relative term though as it really depends on whether the campaign brings you a return on investment or not.

For a large company wishing to advertise its products and brand to a mass audience it could certainly be worthwhile, and would most likely be far more cost-effective than traditional TV advertising.

However, an independent video producer trying to get his YouTube comedy channel off the ground will seriously struggle to turn a profit. If your video is not the sort that will go truly viral then the ROI will be even lower.

My point of view on expense is slightly tainted though since I’ve run viral campaigns to generate hundreds of thousands of page views a day to my own websites, on miniscule budgets, but that is my profession.

If you compare ShareThrough to Google Adwords where traffic typically costs between $0.10 to $1.50 a click (and often higher) then the value of ShareThrough does begin to look better.

I should also mention that ShareThrough does provide tracking and statistics so you can measure how well your video campaign is doing.

Self Service

ShareThrough typically works with big brands and media agencies one-to-one offering consultation as well as a video distribution service.

However, it has recently released a self service product which allows anyone to purchase video views through their system. It will only charge for the views generated through its own system, so if your video goes viral or generates views from other sources you won’t pay for those.

Be careful not to burn through lots of cash by buying thousands of views if you are not sure on the ROI of your campaign, or only have a small budget.

The Past

When YouTube began it was, like every young online video startup, a lawless place with all sorts of content. But that couldn’t continue, and Google’s buyout along with Viacom’s $1 billion lawsuit meant the site had to ‘go legit’, with copyrighted content a no-no.

This meant that UGC was focused on almost solely, with YouTube building a reputation as THE place to go for amateur-shot videos.

But that alone wasn’t going to see Google spin a profit from its massive investment. So YouTube aimed to place more professionally produced, copyrighted content on the site. Alongside both the deals that made it legal and the advertising to (hopefully) pay for it.

‘Shows’ & More

YouTube has since done plenty of deals to this end. Clips from some media organizations and full-length videos from others are now available to watch perfectly legally in most countries YouTube serves.

But it’s greatest achievement is in the U.K., where the company persuaded Channel 4 to make all its 4oD content available on YouTube.

The British YouTube now has a ‘Shows’ section with videos (some preview clips and some full episodes) from Channel 4 and 60 other broadcasters. But it still needs people to know about this if it’s to prove successful and pave the way for other, similar deals.

YouTube’s Got TV

According to The Guardian, YouTube is embarking on its first offline advertising campaign to do just that. For a company that was built on word-of-mouth and is still growing thanks purely to the Web, this is quite a change of pace and strategy.

The campaign is called YouTube’s Got TV and will comprise of poster ads on public transport, full-page ads in newspapers and magazines, and even the taking over of a shop in London’s Carnaby Street.

Anna Bateson, YouTube’s director of marketing, said:

“We know that YouTube users enjoy the huge range of content on the site, but there’s a growing demand in particular for full-length programming – so this campaign aims to tell our users that the full-length TV content has now arrived. The Shows section of the site is a major new opportunity for our partners and advertisers to reach new audiences.”

The Future

This clearly means YouTube means business. It wants professional content to be a big(ger) part of the site in future and therefore needs deals such as the Channel 4 one to be successful for both parties.

The U.K. could possibly be a testing ground for a wider roll-out of this kind of thing. It certainly wouldn’t hurt YouTube to have statistics showing how successful such a deal could be when trying to woo the big U.S. television networks and content creators.

Hulu On The Up

According to AdAge, Hulu is growing once again after experiencing a few months of static or even negative growth. Figures from the comScore Video Metrix suggest Hulu grew almost 47 percent from September to October.

Over the last month Hulu has served an estimated 856 million video streams, up from the 583 million streamed during September. Unique visitors also rose, up 10 percent from 38.7 million to 42.5 million.

This represents an even bigger jump in viewing figures than that experienced after the Super Bowl ads in February which prompted a 33 percent rise.

New Fall TV Season

The main explanations given for this rise in viewer and streaming numbers are October being the first full month of the new Fall TV season and the first full month of ABC content including Lost and Desperate Housewives entering the Hulu library. The latter is as a result of Disney taking a stake in the company.

Interestingly, this suggests that online TV is still indebted to traditional TV. It isn’t the archive content such as The A-Team, The Lone Ranger, or Airwolf that is turning on viewers but the chance to watch missed episodes of new hit shows.

The renewed interest in Hulu means the company has almost sold all its advertising capacity for the rest of the year. Which is, unfortunately, leading to some urging Hulu to up its advertising slots to better match those present in traditional TV.

Embed Policy

While this is all good news for Hulu, its new embed policy seems to be overly harsh on startups. As reported by NewTeeVee, new video discovery site Rippol was recently forced by Hulu to stop embedding all of its shows. And Yidio and CastTV have reported similar demands from Hulu.

While its possibly understandable for Hulu to try and protect its content from being embedded wholesale on other sites, this does seem to be a distinct change of policy. The sad thing is that the only likely effect will be a negative one on traffic.

YouTube Revenue Vs Pageviews

Since buying YouTube for $1.65 billion in 2006, Google has tried to turn it into a moneymaking site. It’s certainly managed to take the site to the next level, with it now managing one billion page views a day, but the revenue still hasn’t come.

There’s been some debate over whether YouTube makes money, breaks even, or loses money every year but needless to say revenue needs to be upped in order for Google to make its money back. Especially as Google CEO Eric Schmidt has admitted the company paid $1 billion too much for the online video site.

Advertising Experiments

Google has experimented with a range of advertising options on YouTube. From huge one-off banner ads to overlay ads which remain through the course of a video. From pre-roll adverts before clips to post-roll after clips. None of which has been the magic bullet required.

YouTube now carries a range of advertising, with Google clearly deciding a scattergun approach for different videos and advertisers is the right path to follow. But the company still wants to fine-tune the experience.

Skippable Pre-Rolls

According to MediaPost, Google is now testing out skippable pre-roll advertising. The ads will run on carefully selected videos from content partners who have agreed to be a part of the experiment.

Google will collect data on when the ads are skipped, on what length and kind of video they are mostly skipped on, and the people most likely to skip an advert rather than watch in full.

The results of this experiment will then be used to formulate a new advertising model.

Conclusions

Pre-rolls are already used successfully on Hulu and other sites, but the YouTube crowd hasn’t really accepted them as of yet. Whether the option to skip ads that are too long or for uninteresting products makes a difference isn’t yet clear.

Either way Google will obtain data it can then use in the future to further fine-tune and develop its advertising model. The ultimate goal, of course, is to turn a profit and make the most of those one billion page views a day.

YouTube and Channel 4

YouTube has for a while now been moving away from user-generated content and trying to entice broadcasters into providing content via the site. It’s had mixed success but it has now nabbed a major broadcaster in the form of Channel 4.

Channel 4 was the first UK broadcaster to launch a video on demand service, doing so in 2006. But 4oD failed to get the attention it deserved and the BBC iPlayer snatched the limelight instead. 4oD has gone through some major changes since then and now rivals the iPlayer for user experience.

Deal or No Deal

However, Channel 4 is keen to have its programming reach a wider online audience, and so has teamed up with YouTube. A three-year deal between the two should do just that, and provide revenue as well.

For its part YouTube will gain full-length TV shows and also take a cut of the revenue. Although the financial terms of the deal have not been made public, YouTube is expected to take a 30 percent cut of all revenue generated by the Channel 4 programming.

4oD And…

4oD will continue to provide the premium catch-up service it does currently, but YouTube will gain 50 hours of current programming soon after it airs on Channel 4 as well as around 3,000 hours of archived programming.

This includes shows such as Ramsay’s Kitchen Nightmares, Brass Eye, Skins, Teachers, Peep Show, and the Derren Brown Specials which recently had everyone in the UK talking.

Channel 4 Speaks

Channel 4 said:

“Channel 4 was the first broadcaster anywhere in the world to make all its commissioned content available online and we’ve consistently pioneered in this field. This strategic partnership is another important milestone for us and we’re delighted to be combining the power of the ‘4’ brand and the appeal of our content with YouTube’s unrivaled reach and reputation online.”

“Making our programmes directly accessible to YouTube’s 20 million UK users will financially benefit both Channel 4 and our independent production partners and help bolster our investment in quality British content. It demonstrates our ability to strike dynamic commercial partnerships to help underpin our future as a commercially funded, not-for-profit multi-platform public service network.”

Conclusions

Unfortunately, this deal only applies in the UK. And although there are 20 million YouTube users in the UK it would have been nice to see the rest of the world welcomed to the party. Those international rights licensing agreements have got in the way yet again.

But in every other way this seems a great deal. Both Channel 4 and YouTube gain from it, and the real winners are viewers who now get to watch premium quality programming online, on demand, and for free.

YouTube and Warner Music Group have now forged a new deal which will see WMG having its own branded player and able to sell its own advertising inventory.

Warner Walks Away

It was late December 2008 when Warners decided to pull all its music videos from YouTube. It happened due to a breakdown in communications while the two parties were trying to thrash out a new licensing deal. The ones that had been in place for years were coming to an end.

As always, it came down to money. The Warner Music Group wanted a bigger slice of the revenue pie and YouTube was unwilling to deliver. Regardless of who was right and wrong, the incident helped no one in the end.

The Vevo Factor

Talks have continued on since then, and a deal has been rumored for a few months. In the meantime, YouTube has inked new deals with the other three major record labels, Sony, Universal, and EMI.

The last nine months has also brought news of a new venture called Vevo, which is best described as a Hulu for music videos. Vevo will see many music videos disappear from YouTube only to reappear on a separate, YouTube-backed site.

Warner Welcomed Back

Yesterday saw YouTube finally confirm it had settled the argument and signed a new deal with WMG. All the record label’s many music videos, including by artists such as Green Day, REM, Madonna, U2, Red Hot Chili Peppers, and Kid Rock will make their way back on to the Google-owned site.

Warner has managed to secure an arguably better deal than the other record labels by holding out for better terms. Details are still a little sketchy at this point but there will be a Warner Music Group branded player and the company will be able to sell its own advertising inventory.

YouTube will still take a cut but the margins are clearly going to be in Warners’ favor.

Conclusions

This is good news for all parties, as YouTube gets those all-important music videos back and WMG gets another revenue stream back. Viewers, of course, also benefit as they are no longer denied the chance to watch their favorite music videos.

The only question left is where Vevo sits in all this. While the other labels are moving away from YouTube to the new site, Warner now looks to be entrenched on it.

Can Vevo be monetized successfully enough to please both YouTube and the major record labels? And will the viewers willingly move over with the music videos?

Online Music Videos

Music videos make up a large percentage of the most viewed videos on YouTube and other online video sites. Along with movie trailers and the very best viral videos, music videos are the biggest hitters by far, as Visible Measures’ viral video chart consistently shows.

This makes the decision to move music videos off YouTube and to their own domain both justified and a strange one. While Vevo has the opportunity to become a premium portal for music videos of all kinds, it’s going to leave a gaping hole on YouTube.

Vevo Forever

Vevo was first rumored in March, with unnamed sources claiming a YouTube spin-off for music videos was on its way. April saw the site officially announced as a joint venture between YouTube and Universal Music. It was then described as Hulu for music videos and that moniker has since stuck, accurate or not.

By May, progress had already been made on the venture, with Vevo naming Rio Caraeff as CEO. And now comes a further progress report, and with it, more questions being asked as to whether Vevo can actually succeed or not.

Progress Report

AdAge has compiled a progress report on where Vevo is now. Sony Music Entertainment is now on board and Warner Music Group is in talks to also join. Big news considering it was only a year ago that WMG removed all its videos from YouTube in a huff over new licensing terms.

Whoever is involved, Vevo is planning a December launch. And it’s looking at ad rates of between $20 and $40 per thousand page views. Which is a much larger CPM than can currently be commanded on YouTube. Which is why all parties are so keen to forge ahead with the venture.

Conclusions

YouTube is going to experience a major hit to its viewing figures come December. And it will undoubtedly take time for page views on Vevo to match those on YouTube for music videos, purely because YouTube is so well-known and so prevalent on the Web.

However, when the inevitable transitional period ends, everyone looks set to gain from Vevo. YouTube will be making more revenue from the music videos, the major record labels have another string to their increasingly important digital revenue streams, and viewers will have a new MTV for the YouTube generation. Fingers crossed.

Hulu – Hot and Getting Hotter

Being British, I’m jealous of Americans for one reason and one reason alone – Hulu. Yes, we get to watch BBC programming on the iPlayer, and there are a number of other online TV catch-up services either already present or about to launch in the U.K. But Hulu offers American television at its best.

Hulu is massively popular in the States, having around 40 million viewers at the last count, who between them watched nigh on 500 million video streams. Which is surely cause for celebration amongst the partners behind the project.

Viewing Figures Vs. Revenue

However, viewing figures will only get you so far, with it all coming down to revenue and profit in the end. And on this score Hulu is still failing to score big. It’s estimated that the company will make losses of around $33 million from expected revenue of $164 million in 2009.

And this clearly isn’t pleasing the head honchos at NBC, News Corps. or Disney, the last partner to join. In particular, and rather unsurprisingly, News Corps. chairman Rupert Murdoch doesn’t seem to enamored with the current situation. And NBC Universal CEO Jeff Zucker agrees.

Content Partners Speak

According to Multichannel News, both spoke at the Goldman Sachs Communacopia conference on Sept. 15. Murdoch started by suggesting that Hulu is being eyed with alternative forms of revenue channels in mind. He said:

“Are we looking at it with a view toward adding subscription services and pay per view? Yes we are. No decisions have been made yet.”

While Zucker seemed less sure pay models were the future but also didn’t rule them out, particularly in the long-term. He said:

“I don’t think anyone predicted we would be this far along after 18 months. We are ahead of plan and we have more than 200 advertisers at Hulu.”

“We are going to continue to be as innovative as anyone on monetization of the ad-supported model, that’s really where our focus is today.”

“Whether there are other ways to monetize Hulu down the road, it is something that we are open to, something we will explore, but there are no plans at this time.”

Could A Pay Hulu Work?

There are clearly people out there willing to pay for content over the Web, with streaming rentals and digital copies selling well across the Internet. However, that’s not how Hulu has been set up and I can see a lot of people dumping the service without a second thought if they were suddenly asked to pay for the privilege of using it.

It’s likely to be many years before online video advertising catches up with TV revenue, if ever. But does that mean the advertising-based model should be abandoned? Especially as top-rated shows such as The Simpsons and CSI can command higher CPM advertising rates on Hulu and the like than they can on traditional TV.

The Revenue Issue

The problems Google has had turning the massive popularity of YouTube into a massive and repeating payday are well-known. OK, so it’s not as though YouTube is a failure or anything but its revenue is certainly struggling to justify that huge $1.65 billion Google paid for the site.

Part of the problem is the sheer number of videos on the site that either can’t or aren’t monetized. The “can’t” is due to concerns over making money from copyrighted clips while the “aren’t” stems from YouTube’s unwillingness to monetize videos which have no chance of making any money – most of the videos uploaded to the site every day.

Preferred Partner Program

In May 2007, YouTube started sharing advertising revenue with selected video producers. These Preferred Partners were content creators such as Fred and LonelyGirl15 who had a known brand and a selection of very popular videos already on the site.

Since then, these lucky few have been making money from every video they upload to YouTube, and although we’re talking just a few cents per video view, this can soon add up to thousands of dollars. But what of those content creators who only ever manage to produce one viral video hit?

Viral Video Payday

Today saw YouTube announce that those people are, finally, going to get the payday they’ve been craving since they saw their videos go viral. A post on the Official YouTube Biz Blog spells out how the YouTube Partnership Program is being extended to include those one-off viral video hits we all know and love.

Over a thousand established viral videos will be invited to the program immediately. These include the two-year-old ‘Battle At Kruger‘, which has racked up 45 million views and is still gaining thousands every day.

From here on in, new viral videos will be invited to participate in the program based on a rapid accumulation of views, how viral YouTube considers the video to be, and a compliance with the YouTube Terms of Service.

Conclusions

This is something YouTube should have done years ago. Just imagine all those millions of video views that could have been paying out, not only to the individual producer of the video but to YouTube as well.

Interestingly, despite having the biggest viral video of the year so far, the ‘JK Wedding Dance‘ video is not eligible for inclusion in this program because Sony has already monetized it due to the use of Chris Brown’s Forever. I’m guessing JK wish they had used an original composition now.