Posted by: Rob Hof on October 7, 2008
When even Google CEO Eric Schmidt and cofounder Larry Page admit their YouTube video sharing site might take awhile to make more money than the sub-$200 million in revenues that analysts expect this year, you know they’re struggling to find fundamentally new ways to do that. Today, YouTube debuted one small but potentially significant way the site might extract more dollars from the 5 billion videos it serves per month: click-to-buy buttons. (A post on Google’s official blog and on the YouTube blog, with more details, is after the jump.)
As people watch videos on YouTube, they’ll be able to buy the song, a game, or eventually other products related to that video, via the buttons you can see at the bottom of that photo at the top of the post. Here’s one example on a Katy Perry video, and here’s one from Electronic Arts where you can buy the new game Spore from Amazon.
So far, only Amazon.com and Apple’s iTunes are involved. When you click on those links, you’re taken to Amazon.com or the iTunes store. But in coming months YouTube plans to roll out click-to-buy with other partners in music, film, television, and publishing. It’s part of a broader e-commerce platform, the shape of which YouTube is keeping under wraps for now, says Bakari Brock, YouTube’s business affair counsel. “There’s a lot of promise for this,” he told me. He envisions sales of everything from concert tickets to the cool sunglasses an artist is wearing.
For now, click-to-buy involves the direct merchants (Amazon and iTunes) selling digital products. But eventually, Bakari sees other advertisers selling against videos.
Click-to-buy joins several other recent moneymaking opportunities at YouTube, such as in-video ads that run at the bottom of videos 15 seconds after they start, contests, and a content identification system that allows video owners to share in revenues from ads placed against their content. Interestingly, says Shishir Mehrotra, YouTube’s director of product management for ad solutions, content owners told YouTube to “monetize” 90% of the videos they claimed, rather than having YouTube simply take them down. (Not surprisingly, Viacom, which is suing Google over unauthorized video clips on YouTube, isn’t part of that 90%.)
For all that, it’s apparent that YouTube, for which Google paid $1.7 billion in 2006, still has a slog ahead to make money on the popular site. A few weeks ago, Schmidt insisted that YouTube has the “luxury of time” with YouTube. I read that to mean that, while click-to-buy looks promising, even if it takes off YouTube will still need to come up with a lot more ways for advertisers and video partners to reach people watching the videos.
Here's the Google blog post:
I clicked to buy and I liked it
By Glenn Brown, YouTube Strategic Partner Development Manager, and Thai Tran, YouTube Product Manager
When you view a YouTube video with a great soundtrack, you often see comments from YouTube users asking about the name of the song and where they can download it. Or when users watch the trailer for an upcoming video game, they want to know when it will be released and where they can buy it.
Today, we're taking our first steps to providing YouTube users with this kind of instant gratification, by adding "click-to-buy" links to the watch pages of thousands of YouTube partner videos. Click-to-buy links are non-obtrusive retail links, placed on the watch page beneath the video with the other community features. Just as YouTube users can share, favorite, comment on, and respond to videos quickly and easily, now users can click-to-buy products -- like songs and video games -- related to the content they're watching on the site. We're getting started by embedding iTunes and Amazon.com links on videos from companies like EMI Music, and providing Amazon.com product links to the newly released video game Spore(TM) on videos from Electronic Arts.
This is just the beginning of building a broad, viable eCommerce platform for users and partners on YouTube. Our vision is to help partners across all industries -- from music, to film, to print, to TV -- offer useful and relevant products to a large, yet targeted audience, and generate additional revenue from their content on YouTube beyond the advertising we serve against their videos. And those partners who use our content identification and management system can also enable these links on user-generated content, by using Content ID to claim videos and choose to leave them up on the site.
These retail links are being gradually added to our library of music videos and are currently only available to users in the United States, but our goal is to slowly but surely expand the program to additional content and product partners, as well as our international users. We'll be experimenting with the UI over time to make sure this works for our community, and we'll continue to innovate based on your feedback. We're just getting started, so stay tuned for other innovative new features and product options soon.
YouTube partners interested in this program should contact their partner manager.