Jul 9 2008

YouTube not good enough for making money, says Google

Shoaib Hashmi | 864 Views

Google is struggling to find ways of making money with the YouTube, but still they can’t figure out why the later is incompetent in the department of ‘ad sales’. Now Google has decided to discard their strategy of maintaining preroll and postroll ads on the video sharing site. The source of the news is yet to be known but it was first reported at The Wall Street Journal. Furthermore, the news cited that the YouTube is expected to generate a revenue of $200 million this year, from ad sales.

Though the figure is way too much higher than what most of the analysts expected earlier, but if it seems to be true by any mean then it is likely to think about what kind of money the video sharing site needs to convert itself into a revenue generating machine.

Eric Schmidt, the Google CEO, has made many statements in the current year regarding YouTube. He has been constantly saying that he is not satisfied with the revenue YouTube is making. Google has already paid $1.6 billion to YouTube in October 2006. The amount was paid in order to figure out the ad model of YouTube. It has been almost two years since the payment and the results aren’t satisfactory for Google and it is visible from Eric’s statements.

By including prerolls and postrolls in the most popular video sharing site, it would be an indication that Google has failed to work on any fresh ideas of advertising to the site’s ad-hating users. Those ads might spark a wide user criticism as most of the users hate ads as they are the source of distraction.

Some major points on Wall Street Journal were:

Google has identified 105 problems with YouTube’s ad sales.
Advertisers aren’t willing to post their ads on many YouTube videos.
Because of legal questions, Google is only selling ads against video clips that have been approved by media companies and other partners, which, according to the story, is 4 percent of the total clips on YouTube. Think about the significance of that. Every minute more than 10 hours of video is uploaded to YouTube and only about 20 minutes is worth anything to the company.

YouTube has been accused of being a place regarded as ‘heaven for pirated stuff’. Recently Google lost $1 billion lawsuit which was filed by Viacom.

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