January 30, 2007
YouTube Links with Google Video Search, Plans to Pay Content Owners

Subpoenas from Twentieth Century Fox isn't all that YouTube and Google have in mind...or GoogTube, as Geoffrey Long likes to call it.

The first part of the plan was announced last Thursday, when YouTube released a statement that YouTube's video listings will start appearing as part of the Google Video search service. Certainly, most people expected the expansion of Google's video services was coming now that YouTube was in house. Through the change, Google Video searchers will be able to get full access to YouTube content through regular video searches.

The long-term plan, of course, is to make YouTube the site that will house the content, while Google itself will work toward increasing the viability of video search tools and monetizing those functions.

Meanwhile, over the weekend, Google also announced plans to start sharing the revenues derived from advertising to content owners. It's unclear exactly what this means but not a complete surprise, as some other sites have launched similar models.

Earlier this month, I wrote about Metacafe, a site that has launched the Producer Rewards program to give video creators $5 for every thousand views.

At the time, I wrote,"I think it's a great idea to create incentive for compelling user-generated content, but the Metacafe folks are becoming well-aware of the challenges of not getting ripped off from making such an offer. They said they consider it a measure of success that people are trying to beat their system, but it's going to be an interesting struggle as they continue trying to expand the Producer Rewards program."

In Metacafe's case, they wanted to establish a difference between self-promotion and tricking people to visiting the site or creating multiple accounts to boost a video's popularity or the same IP address viewing the same clip over and over again in a short amount of time. Will YouTube have enough safeguards in place to keep these types of activities from beating the system?

C3 affiliate David Edery over at Game Tycoon recently weighed in on paying content owners as well, writing:

Users aren't demanding it yet. But then, they haven't had many high-quality choices. And the choices that they do have are hobbled by network effects -- specifically, the powerful network effects of competing giants like YouTube, for example. It's very difficult for a startup to make headway against an established community site in the short-term. But positive network effects are not a permanent guarantee of dominance; competing platforms with new and improved features can eventually build critical mass. (Skype, anyone?)

Nevertheless, the question remains what the final version of YouTube will be and what the end game for a business model will be. I assume this week's development is still just scratching the surface of this issue.