Forget the pre-roll ad. Instead, think of content-sharing partnerships, contextual ads and more experimentation as Google seeks to monetize the eyeballs garnered by its $1.65 billion online video toy YouTube.
While calling video advertising something that could be “a significantly large business for us,” Google CEO Eric Schmidt hastened to say that “it’s too soon to tell when” during the Q&A part of Wednesday’s earnings call.
Revenue-sharing partnerships, with both traditional and user-generated content producers, seemed far more interesting to Schmidt than pre-roll ads, which he said “have historically not made sense… and there’s some evidence that the traditional pre-rolls people have done did not work.”
(We pause for a cheer from YouTube viewers.)
Instead of being sued for having copyrighted work on YouTube, Schmidt said Google will be encouraging big content houses to submit material to Google, and then partner to monetize the fan base that materializes.
“We’ll ultimately develop partnerships in advertising [with content owners], many unusual,” said Schmidt, who foresees links between Google ad systems and content owners’ systems, in some yet-to-be-determined fashion. Why would the content owners want to partner instead of sue?
Because Google is finding the people who want to watch their content, Schmidt argued. “We’re talking to their fans,” he said.
Some more selected YouTube tidbits from the call:
— Schmidt did not break out YouTube revenue, but did say “early returns” of audience and advertising numbers were “very positive” and that Google was going to get its money’s worth from the deal. “We’re very pleased,” he said.
— Google, Schmidt said, is spending big bucks on video and audio fingerprinting technologies, which are “of significant interest” to Google.
— Chad Hurley has been “pushing very hard” for a revenue-sharing model for people who upload their own videos to YouTube. Expect such a model to emerge this year, Schmidt said.