The Monetization of YouTube Begins

By Mark Evans in Advertising/Marketing, Google, Media 6 Comments

Fact: People love watching YouTube videos.

Fact: People don’t like advertising when watching videos, especially if it happens before the clip begins.

Challenge: How does Google monetize YouTube so it can get an ROI on its $1.65-billion investment.

Solution: Something called an overlay that appears on the bottom fifth of the frame about 15 seconds after someone starts watching a video. If the ad is interesting enough that someone clicks on it, the ad will start and the video will stop. The New York Times has all the details.

First take: Interesting proposition that the entire video industry will be watching with great interest to see if consumers actually like the format and, most important, click on the ad videos; and whether it’s something advertisers will find appealing. So far, pre-roll ads have seen modest success while post-roll ads only works if they’re compelling – Rocketboom, for example, has used this tool often.

Clearly, there’s a lot at stake for Google, which desperately needs to find a way to squeeze more revenue out of YouTube to justify the acquisition and attract more content owners who have been sitting on the sidelines before getting into any kind of partnerships.

The other challenge facing Google is coming up with a revenue-share formula that’s enough of a win-win for everyone involved. For all the success of the AdSense program, content owners only make a small portion of the revenue generated. Google is talking about a revenue split, which, in theory, sounds far more appealing than AdSense.

The bottom line is online video has to be monetized so content producers will start distributing their best material, which will attract more consumers, which will attract more advertisers, which will generate more revenue for video service providers such as Google.

More: Deep Jive Interests said Google’s announcement is a “big deal” because YouTube sitting on an “absolute gold mine” of videos that people spending hours watching. Scott Karp makes a great point that the video ads not only need to be unobtrusive but relevant, while Andy Beal calls it “an innovative step in the right direction”.

Wanted: One-Stop Messaging Service

By Mark Evans in Google 3 Comments

Fuser
Right now, I have the following “communication accounts”: ISP-based e-mail, Yahoo, GMail (2), PlanetEye, Skype, Facebook

All these accounts mean it’s a challenge making sure I check every one on a regular basis, although GMail is a very good tool for receiving all your e-mail messages and being able to send messages using different e-mail addresses. But what about Skype and Facebook, which are becoming increasingly popular communications tools? In the past couple of weeks, for example, the number of Facebook messages has really grown – mostly because people say it’s a convenient and easy way to keep in touch.

Given this communication challenge, I started looking around for a single service/application that could handle all my accounts. After a healthy search, I found Fuser, which bills itself as “the coolest way to unify your mail from multiple accounts. View your mail and social networking messages in one convenient location.”

After spending a bit of time configuring several accounts (Facebook, GMail, PlanetEye), Fuser started to download all my messages. Of course, this took awhile given I have about 2,800 GMail messages given serves as a way to backup everything.

Finally, I was able to see Fuser in action. To be honest, I was pleasantly surprised – nice, clean interface and, as promised, it delivered every account (other than Skype). So far, so good until I logged into my Gmail account only to discover that I had been cut off for 24 hours for breach of terms. To their credit, Fuser provided a quick explanation. Apparently, Google is “sensitive to how you access your account” so there have been a few situations where it locks people out for a short people of time – mostly when you’re logged into both services.

That’s a fair enough explanation but it was, nevertheless, disappointing. Still, Fuser has a lot of potential for people looking for an all-in-one communications solutions. The only fear is that Google will enhance GMail to include Facebook messages.

More: Facebook just announced its has improved its messaging service so you can now use normal e-mail addresses, which means more people will likely use Facebook as the places to read/send messages/email. Larry Borsato describes the move as “dumb” while AllFacebook – the blog for all Facebook, all the time – said once Facebook adds search functionality, he’ll start to use its messaging system even more.

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What Do You Expect for Nothing?

By Mark Evans in Web 2.0 6 Comments

In asking whether the kerfuffle over the Skype outage means many people have become too dependent on it, Aiden Henry ends his post with a provocative question: “Are we too dependent on free services like Skype?”.

It’s a particularly poignant question given one of the pillars of the Web 2.0 economy is “free”. In return for attracting thousands of users to a free service, companies can then lean on advertisers who want to go after large audience focused on a particular area/sector. It is a business model that has thrived in recent years based on the idea that a rising online advertising market will raise all start-ups.

This assumption raises two questions:

1. Is the “free business model sustainable in the long-run for other than a handful of dominant players (e.g. Google, Facebook, MySpace, etc.)? If the answer is “no”, then will businesses have no choice but to embrace “freemium” whereby you offer basic service for free and then charge for more features?

One of the major problems right now with attempting to get anyone to pay for anything is there’s too much competitive. The moment you implement a subscription fee – even for a really good service – there’s someone else just a click away wiling to offer it at no cost. And as far as I can tell, the freemium model has yet to gain much momentum although it appears that some players such as Freshbooks are doing well with it.

The second question is: what are the expectations of people using a free service?

If, for example, you’ve never paid a penny to use Skype can you really complain too much when it goes down for awhile? Sure you’ve become dependent on it as an everyday communications tool but what do you expect for nothing? The same goes for any other free service online. Of course, most online users believe they have an inherent right not to pay for anything but still get top-notch service, which means they complain vociferously when things go awry.

Don’t get me wrong, having your service go down is a bad thing because if enough users get frustrated and decide to leave for a rival, it means advertisers could go away too. But the reality is this sense of entitlement among online users is unrealistic because expecting to get everything for nothing is just wrong.

More: Skype has come out with an explanation about why its service crapped out.

And What of MySpace?

By Mark Evans in Advertising/Marketing 1 Comment

Myspace
For all the talk about Facebook this and Facebook that, there hasn’t been a lot of attention paid to MySpace recently.

It would be easy to get the impression that MySpace could be in danger of becoming the next Friendster given it’s been so rudely thrust out of the social networking spotlight. But that would probably be the wrong assumption given MySpace had 178.8 million unique visitors in June compared with Facebook’s 70.4 million. (Note: MySpace had 3% year-over-year growth while Facebook’s was 35%)

So what is going on with MySpace?

It is losing its users/mojo given Facebook seems to becoming the place for people to gather? I hear so little buzz about MySpace these days that it’s hard not to wonder if the MySpace party is over then. When I ask people about MySpace, a common comment is MySpace is the place where bands have to be, which could suggest MySpace may be headed back to its roots as a music-focused service.

Truth be told, MySpace is doing just fine – at least for now. News Corp. recently reported that MySpace generated more than $500-million of revenue for the year ended June 30, and it could do about $800-million in fiscal 2008. And according to eMarketer, the global social networking advertising market is expected to expand by about 60% in 2008 to $1.9-billion.

So rather than being concerned about MySpace and the threat of Facebook, it appears MySpace is doing just fine as the social networking market (users, unique visitors, advertising revenue, etc.) continues to grow. A rising tide lifts all boats so it looks like smooth sailing ahead for the MySpace.

Emarketer Chart

Note: Speaking of numbers, ComScore has come out with its July stats package, which showed Facebook had 30.5 million unique visitors in July while Fox Interactive Media had 81.2 million.

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I Miss My Skype

By Mark Evans in Aside 3 Comments

Skype’s still down. Unlike many people, I don’t people are going to lose their confidence in VoIP or Skype but it’s still frustrating not to be able to use Skype. For many people, the outage illustrates just how valuable Skype has become – something you can’t say about a lot of other Web-based services.

There’s Gold in Them Thar Facebook Apps

By Mark Evans in M&A, Web 2.0 No Comments

You knew the Facebook application landscape is red-hot when nearly 500 people gathered for a Facebook Camp recently in Toronto as everyone looks for insight into how to leverage the social network’s explosive growth.

More evidence of Facebook Fever is TripAdvisor’s $3-million reported purchase of Where I’ve Been – the largest acquisition (so far!) of a Facebook application. Where I’ve Been is the biggest travel application with 2.3-million users while TripAdvisor’s Cities I’ve Visited is second with one million.

The deal makes several statements: lots of people are not only using Facebook but enthusiastically embracing applications as well; travel is clearly a sweet-spot, which is not surprising given Facebook’s demographic, which is leaving is college roots behind; and the more popular applications are being seen as valuable must-have tools by suitors.

The question now is whether TripAdvisor’s acquisition is just the tip of the investment iceberg. For the most part, investors move in pack so this deal could be a sign that we’re in for a flurry of deals, and/or we can expect more venture capitalists to be scrambling to get into some of the more popular or interesting Facebook applications.

More: Squash suggests the $1.30/per Where I’ve Been price that TripAdvisor paid is not unreasonable if TripAdvisor can convert a healthy number of these people into becoming TripAdvisor users.

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