News:  Ian Schafer has a recount of what happened at YouTube’s “Videocracy” event yesterday.  YouTube will be enhancing some tech features to make them basically better for advertisers.  The video editing tools will be finally improved — I’ve been complaining about them from the start!  Steve Chen is now big into moving videos onto TV (with his pet project of mobile phones already deployed).

Analysis: These are all interesting developments.  I hope to say more after I see them in action.

News: The Wall Street Journal had an excellent article today about how “Social Sites Don’t Deliver Big Ad Gains.” Unfortunately, the entire article is not freely available online. It had a couple paragraphs specifically about YouTube that suggested it was having trouble luring big corporations to advertise on YouTube. The problem is that some corporations may be skittish in advertising alongside videos that are not politically correct or free of controversy. Even CEO of Google Eric Schmidt admitted that things were going slower than expected with the monetization of ads on YouTube.

Analysis: Uh-oh.

News:  YouTube has finally expanded its revenue-sharing program to allow anyone (who creates videos for YouTube) to apply for a share in the ad revenues.  If approve, you become a “partner” and get some undisclosed amount of money from ad revenue generated by the traffic generated.

To qualify, you must meet 4 criteria:

1.  You create original videos suitable for online streaming.

2.  You own the copyrights and distribution rights for all audio and video content that you upload — no exceptions.

3.  You regularly upload videos that are viewed by thousands of YouTube users.

4.  You live in the United States or Canada.

Analysis:  Number 2 must be a typo.  There’s no way that most video creators will own the copyrights to the music in the user-generated videos.  They could have a nonexclusive license to distribute and perform the copyrighted music.   But that’s quite different from owning the copyrights to the audio. 

Cool commercial.

News: NYT and Wired both report about Nick Haley, a UK student who remixed video from Apple — without permission — and made a new ad for the iPhone with music from a Brazilian band, CSS, “Music Is My Hot, Hot Sex.” Even though Haley didn’t get Apple’s permission to use its copyrighted images, Apple like the video so much it asked Haley to make a version for TV, to air tonight during the World Series.

Analysis: This is a fascinating example from a copyright perspective. The guy didn’t have copyright permission, but it turned out what he did was something that the copyright owner (at least one of them) ended up liking. (I don’t know whether the band authorized the use of its song or not.) I’m researching this kind of scenario in our Web 2.0 world and will be writing an article about the phenomenon. I think it has some serious implications for how we should understand the function of copyrights.

News: Google went live with its new “Video units”–they are basically video players that you embed on other websites, with ads both at the top of the player and internally at the bottom of the video. If you click on the ad, you will be redirected to the website for the advertiser. It looks something like this:

So far, the videos are limited to certain Partners of YouTube, such as Smosh and Val’s Art Diary. I think the ads come from Google’s advertisers in the AdSense program (either all of them or some subset of them). If you scroll down to the player on this link, you can see a video unit in action.

Analysis: The embeddable video unit is a logical extension of the InVideo ads YouTube experimented with back in March on YouTube’s website. The InVideo ads were on YouTube, the video units will be embedded on other sites. The video units are a little less slick, though, than the InVideo ads, since the units don’t have internal video ads to watch within another video like the InVideo ads–they simply redirect to another website.  (By the way, I can’t find any more of the slick InVideo ads on YouTube. I wonder when they will be deployed again.)

Here’s my biggest question about the video units: are they too big in size to really catch on? I’m having a hard time imagining how a website will fit the video unit on its site. It occupies a lot of space, so you have to devote a good chunk of your site to the video unit. Sure, some sites can easily do so, but other sites probably won’t want to sacrifice so much space to a video unit. YouTube and Google should consider a smaller video unit, kind of like the size of the “vod pod” I have on this site — look on the right hand column.

The video unit could easily fit within a blog post. But the downside of relying on blogs for the Video Units is that the best blogs are constantly changing, so the Video Units will not remain at the top of the webpage (unless constantly used as the lead post).   Moreover, some bloggers might not rely on the Video Units (over the regular embedding of YouTube videos), since you can’t embed every YouTube video within the video unit–only the videos of the few special Partners in the revenue-sharing program. As these video units are deployed, I will follow up with some more reaction.

News: Google will announce today an ad program using videos of select YouTube partners on other sites through Google’s existing AdSense program by deploying “video units.” The videos will contain the InVideo ads that scroll on the bottom of the screen for a few seconds. According to the AP, “Google will share the ad revenue generated by the YouTube videos with the content provider and the Web site that shows the clips.” (more) TechCrunch blog has a post. Google has this video.

Analysis: It’s been 1 year since Google bought YouTube for $1.65 billion. While YouTube drives a lot of traffic to its site, YouTube hasn’t made much revenue. There’s a lot riding on this ad program and deployment of InVideo ads on YouTube itself. I’m still waiting for a full deployment of the YouTube ads to give my sense on how good it will be.

News: I just noticed an ad from Barack Obama’s campaign on YouTube. It’s the first I’ve seen from a presidential candidate.

News:  Google VP David Eun was in Korea for the  Dicon 2007 conference.  He announced that YouTube is negotiating with content providers to feature news videos on YouTube, which will be synched with relevant InVideo ads as a part of revenue-sharing deals.  (More)

Analysis: This makes sense on both sides.  News organizations are hurting for revenue, given the Internet’s popularity and ability to make news free.  YouTube needs “safe” videos (not copyright infringing) that will appeal to advertisers whom YouTube wants to attract to its site.  It will be interesting to see, though, if people watch news on YouTube, especially if it comes from mainstream media.

News:  Here are my preliminary thoughts on YouTube’s business plan, i.e., how it hopes to make a profit.

1.  Continually attract millions of viewers, users, and video creators to YouTube

2.  Join forces with Google to incorporate YouTube videos in all basic Google searches (thereby helping to serve No.1 priority above), and to deploy Google ads on YouTube’s site.  (Because of potential secondary liability under copyright law, Google ads can’t be fully integrated on YouTube, particularly not with videos that constitute copyright infringement).

3.  Strike revenue-sharing deals with key “partners” of YouTube who are under contract with YouTube and who supply content to YouTube; such quality content more likely to generate views and more desirable for ads

4.  Deploy sleek ads within and at bottom of select videos (“InVideo ads”) created by YouTube partners (some individual creators and some corporate creators).  This last prong is what YouTube is testing out right now, and what YouTube is banking on.  Higher click-through rate for these ads means YouTube can charge more for these ads than regular Google text ads.

News: As far as I can tell, YouTube has shut down the InVideo pop-up ads that it started deploying back in July. I can’t find the pop-up ads anymore on the partner YouTube videos that first had the ads, such as LisaNova, Smosh, and My Chemical Romance.

Analysis: There are several possibilities about what YouTube is doing: (A) YouTube’s rethinking/reworking the ads in light of YouTubers’ mostly negative comments submitted on YouTube’s blog; (B) YouTube’s afraid of VideoEgg, which claims to have developed the ad technology first and applied for a patent on it; and (C) YouTube’s just gearing up for a full deployment of InVideo ads (the earlier ones were a test run).

I think the correct answer is probably (C).

Meanwhile, a Google rep is quoted in papers today touting the success “hit rate” of the InVideo ads, which get “between five and 10 times as many” clicks “compared with the number who view regular display ads — banners or boxes on Web pages.” (More)

News:  I’ve read over some of the negative comments posted by people on YouTube related to YouTube’s InVideo ad system.  Under the new system, YouTube will deploy ads that will pop-up at the bottom 20% of the video screen, lasting for several seconds.  If you click on the pop-up ad, you will be redirected to an internal ad video.  If you do nothing, the ad disappears.  Meanwhile, the original video you played will continue playing.  One thing to note:  the new InVideo ads will only be used on select “Partner” videos — the corporations and select users YouTube has deals with.

Some of the comments sent in to YouTube are filled with expletives, vitriol, and venom.  Here’s one thoughtful comment I read, though:  “‘OK by me. Someone has to pay the bills. Between users fees and advertising I prefer the latter.’ Yeah, but why does someone have to pay the bills with intrusive advertising now when they didn’t before? If YouTube originally had ads IN or BEFORE the videos, it would be just as unpopular as all the other video sites, and it would have never grown the massive user base that greedy baby boomer investors and marketers now salivate over. There is a reason young people latched on to YouTube…it offered something other than the “60% content and 40% marketing” formula that insults us from the television screen. Make no mistake- too much advertising and the real YouTube will soon be remembered as a historical curiousity; a good idea and an interesting phenomenon spoiled by greed. Don’t forget that we are here because we are tired of commercials. If YouTube doesn’t understand that or can’t support thier business in that way, then it’s time you guys found a new line of work.”

Analysis:  The comment has some force to it.  YouTube appealed to people because the videos were ad-free, and not filled with pre-roll ads so common on commercial sites.  I believe the commenter’s exactly right that people were/are tired of seeing commercials everywhere they go (except during the Super Bowl). 

But I’m not sure YouTube’s InVideo ads will ruin the original ethos of YouTube.  As I noted above, the majority of videos won’t have these ads.  One reason is for fear of copyright liability:  YouTube knows that inserting commercial ads into user videos that constitute copyright infringement will expose YouTube to a claim for vicarious liability, outside the DMCA safe harbor.  In other words, there are a bunch of unauthorized videos on YouTube posted by users.  YouTube can’t risk profiting from them with commercial ads because that would defeat any DMCA safe harbor defense for YouTube.

News: Michael Arrington of the Tech Crunch blog has a great post on the market reaction to VideoEgg’s suggestion that YouTube has ripped off VideoEgg’s internal ad technology (for which VE has sought patents). Apparently, a VideoEgg exec has stated (maybe that’s too strong a word?) on the Tech Crunch blog that VE has no plans of stopping others from using internal ad technology with its patents if they are granted.

Analysis: If that’s the case, then YouTube has nothing to worry about in deploying its new internal overlay ad system (unless VE later changes its mind).  I now stand by my original take:  this new ad system is how YouTube will make billions.

News:  YouTube’s own blog has a post asking people for feedback on the new internal pop-up ads within select partner videos on YouTube (discussion in the prior post below).  A number of the comments seem quite negative, as reported here.  Here’s one YouTuber’s video critique.

Analysis:  Personally, I like the internal ads, especially because, as I understand it, they will be deployed only on partner videos (and not the majority of videos on YouTube).  I don’t find the ads intrusive, and YouTube’s got to find a way to make money.  People can’t expect YouTube to offer everything for free to people, even free of any ads within videos.  The internal ads are much better than pre-roll ads that are so common on commercial sites.  If you watch television, you often see things scrolling on the bottom of the screen (like a news ticker) or watermarks at the corner of the screen.  I usually just ignore those things.   

News: As Tech Crunch reported, VideoEgg is blasting YouTube for the new internal overlay ads being deployed on YouTube in the past few months. VideoEgg claims to have developed the technology last year, and even applied for patents on it. Wired has an interview of a VideoEgg exec.

VideoEgg’s internal ads

YouTube’s internal ads

Analysis: OK, the technology of having an internal ad within a video from YouTube looks very similar to the one from VideoEgg (at least currently on its site). Just compare the photos above — they both even have the Bourne Ultimatum ad. I did notice some difference between the ads, though; VideoEgg’s seemed to automatically play by itself at the end, while YouTube’s doesn’t.

Even though the technology is similar, YouTube really has no worry unless that Video Egg successfully obtains patents from the Patent Office for the technology or method used. That’s when you could expect another lawsuit against YouTube. It’s anyone’s guess what the Patent Office will do. Could you imagine, though, if someone tried to patent the use of TV commercials? Sounds a little silly. If a patent is granted to VideoEgg, it could change what I said about YouTube making billions from this new ad system.

News: I’ve already reported about this once before, but I’m getting a clearer picture of what’s going on. YouTube is deploying slick, internal pop-up ads that surface at the bottom of the screen in the videos of its most popular partners. I’ve seen ads for The Simpsons and Bourne Ultimatum. You can tell where the ad comes if you look at the red bar on the video player and see a yellow line. The ads are only visible on YouTube, not on embeds, so you have to click on the links below. If you click on the ad while the video is playing, you’ll be redirected to a slick internal video for the ad.

My Chemical Romance, “Teenagers.”

LisaNova

Smosh

Analysis: It’s clear to me now how YouTube will turn a profit. If you don’t, just look below.

After you click on the bottom ad, you get to the internal video:

News: From the start, YouTube has kept ads to a minimum within videos. No pre-roll ads. But I just noticed an internal ad that pops up for a few seconds within one of LisaNova’s video. You can see it in the photo, too. This is the only pop-up ad I’ve seen so far, but I will try to do some more investigating.  The pop-up doesn’t show from embedded videos on other sites; it only shows if you are on YouTube’s website.

Photo

News:  Sammy Stephens made an ad on YouTube to promote his flea market in Montgomery.  It was all pretty funny until Ellen DeGeneres featured him on her show.  Now, he’s getting not only more customers, but also numerous people and businesses asking to hire him to do their ads.  He’ll be part of a segment on a VH1 show on July 6.  (more)

News:  Miles Beckett, co-creator of the “lonelygirl15″ series, has announced a spin-off show based in the UK.  The show will be about a girl named Kate Modern.  The show will have product-placement advertising.  The show will start in July on Bebo, and then migrate later to YouTube and other sites.  (more)

Go here for details. Here are the list of approved movies you can spoof, some which give you the copyrighted clips to play around with and mash up. You have until May 21st, so get started!