Can YouTube’s ad revenues support premium video content?


youtube-logoAs the world’s largest streaming music service, YouTube’s ability to make money from ads is being scrutinised increasingly intensely by music rightsholders.

Watch for the ripples from All Things Digital’s report this week, then, for it claims that YouTube’s ad revenues aren’t keeping pace with the explosion of viewing on its platform.

The piece claims that YouTube ended up with “a glut of inventory” in 2012, which put more pressure on its advertising rates. It also notes that a number of YouTube-focused video production firms are turning to sponsorship, iTunes soundtrack sales and selling ads on their own sites to make up for the shortfall.

One problem, according to creators, is that Google’s general sales teams are handling ad sales for YouTube. “They don’t have dedicated, 100 percent focused, 100 percent trained people on these sales teams who live and breathe video. It’s that simple,” suggests one exec.

And here’s a point to watch carefully: the claim that while mobile accounts for 25% of YouTube video views, the site has only recently started selling ads on mobile – something Music Ally understands to have already caused a degree of unrest among music rightsholders.

The music industry is hoping for big things from ad-supported services in 2013 and beyond, so Google’s efforts to make money from video will be followed closely.

It’s important to factor in positive experiences though: Cooking Vinyl said in January that it was getting $5k per million views on YouTube and was anticipating “YouTube becoming our most important revenue stream in the future”. Bass music brand UKF, meanwhile, has built a thriving business with YouTube at its core.

Meanwhile, Vevo may enjoy the comparisons between YouTube monetisation and its own premium rates, which have so far yielded more than $200m of payouts for the music industry.

Stuart Dredge

Read More: Analysis News
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