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Has YouTube Cracked the Video Business Model Puzzle?

by Dana Blankenhorn
August 22, 2007
in Broadband, business models, business strategy, copyright, e-commerce, innovation, intellectual property, Internet, investment, movies, Music, Television, Web/Tech
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One thing has become clear since I began covering the business of the Internet in 1994. It’s much harder to innovate business models than it is technology.

Many companies have figured this out and begun acquiring tech outfits even before they have a business model.

The most notorious such acquisition was Google’s purchase of YouTube. And now, over a year later, they claim to have that business model problem licked.

The answer — overlays. Clickable ads run on a portion of the screen, for a portion of the clip’s run-time. The alternative, running ads before, during or after the clip, was rejected by Google because, it said, users wouldn’t stand for it.

Google_overlay_ads
The Register calls this "carpeting"
but that’s bunk. In the first place it’s not rolling out automatically
to all videos — only to those uploaded by big content owners. Second,
the current model of completely ad-free videos is unsustainable, it’s
what is causing the legal headaches in the first place.

If both users, advertisers and (most important) big content owners
accept the model, it will probably be rolled out to everyone else who
uploads to YouTube, less a discount for administration costs.

Will this quickly be copied by all the other "YouTube clone" sites out
there? You bet. Will Viacom, which likes to put in full-screen ads on
clips from its shows which are loaded (or embedded) from its own site,
be watching this closely? You bet.

But this is a problem which has to be solved, negotiated really among
all stakeholders. What Viacom, and the other big content owners, have
never recognized is that you, the user, are one of those stakeholders.
You have to be willing to accept the way the ads run, or the ads
themselves are worthless. Google has recognized this, and has spent
over a year in development before rolling out this solution.

If it works, a lot of the objections to more widespread Internet use,
and the delivery of more Internet bandwidth, will start to fade. The
copyright wars will end.

Fingers crossed.

Tags: copyright warsGoogleonline video business modeloverlay adsvideo adsYouTubeYouTube adsYouTube business model
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Dana Blankenhorn

Dana Blankenhorn

Dana Blankenhorn began his career as a financial journalist in 1978, began covering technology in 1982, and the Internet in 1985. He started one of the first Internet daily newsletters, the Interactive Age Daily, in 1994. He recently retired from InvestorPlace and lives in Atlanta, GA, preparing for his next great adventure. He's a graduate of Rice University (1977) and Northwestern's Medill School of Journalism (MSJ 1978). He's a native of Massapequa, NY.

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Comments 14

  1. Jesse Kopelman says:
    19 years ago

    Question: is there a patent on this advertising process? Clearly Google didn’t invent it, as it is very similar to plenty of prior art, including the non-clickable version of this that is often used on TV broadcasts. However, that is not to say that someone else didn’t or at least didn’t get a patent for it. There may actually be some cost for using this advertising technique that isn’t there for just running a “full screen” ad before or after the content.

    Reply
  2. Jesse Kopelman says:
    19 years ago

    Question: is there a patent on this advertising process? Clearly Google didn’t invent it, as it is very similar to plenty of prior art, including the non-clickable version of this that is often used on TV broadcasts. However, that is not to say that someone else didn’t or at least didn’t get a patent for it. There may actually be some cost for using this advertising technique that isn’t there for just running a “full screen” ad before or after the content.

    Reply
  3. myspace design says:
    18 years ago

    Interesting post. thanks for sharing.

    Reply
  4. myspace design says:
    18 years ago

    Interesting post. thanks for sharing.

    Reply
  5. Jeff Paul Internet Business says:
    17 years ago

    Well this trick is counted in blach hat tricks and that surely do some kind of damage tooo so beware of other aspects before doing that.

    Reply
  6. Jeff Paul Internet Business says:
    17 years ago

    Well this trick is counted in blach hat tricks and that surely do some kind of damage tooo so beware of other aspects before doing that.

    Reply
  7. Acomplia says:
    17 years ago

    This is gonna huge, i just cant belive it that i am standing at a great blog of my life, i am really glad to have my comment here in very decent topic. thanks to webmaster.

    Reply
  8. Acomplia says:
    17 years ago

    This is gonna huge, i just cant belive it that i am standing at a great blog of my life, i am really glad to have my comment here in very decent topic. thanks to webmaster.

    Reply
  9. Accounting says:
    16 years ago

    Starting a small business requires a lot of time, patience, energy and cash. Find out what you need to make sure you’re in a business long enough to realize the success you have always dreamed of!

    Reply
  10. Accounting says:
    16 years ago

    Starting a small business requires a lot of time, patience, energy and cash. Find out what you need to make sure you’re in a business long enough to realize the success you have always dreamed of!

    Reply
  11. LauraJane says:
    13 years ago

    Oh!! I don’t about this concept because i don’t often use the YouTube!!
    Increase Youtube Views

    Reply
  12. LauraJane says:
    13 years ago

    Oh!! I don’t about this concept because i don’t often use the YouTube!!
    Increase Youtube Views

    Reply
  13. Paul Revere says:
    13 years ago

    Interesting

    Reply
  14. Paul Revere says:
    13 years ago

    Interesting

    Reply

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