YouTube to content partners: Advertise away

TechCrunch is reporting that YouTube is beginning to allow content partners to serve their own ads along with videos they make available via the service. This is, of course, pretty huge. It’s one of the key principles of monetizing unbundled media and one that mass media types will immediately welcome. After all, who has a bigger mass that YouTube, right?

Erick Schonfeld, who wrote the TechCrunch piece, rightly notes that Google wants to monetize YouTube any way it can.

The ability to sell their own ads on YouTube is a big deal for larger media companies, especially those which are already selling Web video ads across their own sites. Media companies with lots of video tend to have large advertising sales teams that are typically able to command better ad rates than what YouTube can get. The prospect of selling ads against all of their videos on YouTube at those higher ad rates has them salivating, even if they have to share the spoils with YouTube.

As for YouTube, content from media partners represents maybe only 4 percent of all videos on the site, but it is where nearly all of its advertising dollars are coming from. Anything to make that part of the pie bigger would have an outsized impact on YouTube’s revenues.

There will no doubt be a scramble by TV stations (and newspapers) now to create the YouTube channels that they should have been running all along, and that will be a good thing. When that happens, media companies will have to ask themselves if it makes business sense to run videos any other way. After all, it doesn’t cost anything to embed videos from YouTube, and if you can attach your ads, why spend the money on your own storage and streaming? Most likely, we’ll begin to see some sorts of combinations of YouTube and proprietary Flash players, but even that would alter the dynamics and increase the quantity of professional video available via YouTube.

One other thing to note about this: it’s very Google. Google’s core product, search, is free. The company makes its money by putting ads all over the Web — on the very sites to which its search engine leads. YouTube will follow the same model, it appears.

As I say so often: stay tuned.

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