Mark Cuban: Here's How YouTube Can Make Money (And Lose Market Share)

Michael Learmonth | July 10, 2008 1:30 PM

dogvideo.jpegThat YouTube (GOOG) so thoroughly dominates online video -- but will only make $200 million in advertising revenue this year -- stems from one fact: it only sells ads on the 4% of video uploaded by its semi-pro "partners" and media companies themselves.

How to increase that? Frequent YouTube critic Mark Cuban has a suggestion: Hire more people, manually screen all video for copyright infringement before it's posted, and then sign advertising deals to turn more amateur producers into "partners."

Cuban figures that through a combination of more people and YouTube's existing technology, it could, in fact, review all the video uploaded to YouTube, and ultimately boost the amount of videos it can put ads on to 20%. That, Cuban figures, could increase revenue by $500 million.

Cuban has a point. But, as Citi's Mark Mahaney has pointed out, videos with ads are already disproportionately popular -- they accounted for 28 of the top 100 YouTube videos in May. So Cuban's assumption -- that YouTube could find plenty more non-infringing amateur videos good enough to sell to advertisers -- might be overly ambitious.

Meanwhile, the downside to Cuban's idea? By reviewing all video before it's published, YouTube would end up turning away a lot more sketchy uploads -- which made the site popular in the first place -- and might lose market share. "Sometimes," he says, "you have to decide between the crown and the cash."

See Also:
Google: We Can't Figure Out How To Make Money On Web Video, Either
SAI Debate: How Much Money Can YouTube Make? Mark Cuban Vs. Citi's Mark Mahaney
Citi: YouTube Can Generate $500M In 2009
Lehman: Another Kind-Of Bullish YouTube Revenue Estimate

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18 Comments

Nicholas (URL) said:
I think it would be interesting for youtube to take this idea and modify it slightly, instead screen videos that reach a certain popularity level say 100,000 views, then it goes to be moderated and have ads placed on it if there is no copyright infringement.
dj said:
Everthing will be fine at googie ,the new head bean counter knowns how to cook the books real good. Just ask the pension fund who has BCE now. Over paid about 12 bills.
Neil said:
Tow other problems. When people see that their videos don't become available instantly they'll turn to other sites. Also, many videos contain non-infringing video but use copyright pop songs in the background. Fair use or not? I don't think YouTube wants to deal with that headache.
Neil - the labels and publishers definitely consider that infringement. But note that many of them settled with YouTube early on.
Kieran Hawe (URL) said:
Right concept, wrong execution...story of Cuban's life.

Youtube is going to hit a cross-roads soon. What made it popular is the UGC and ability to find just about anything and everything video related in one location. However, copyrighted material and quick clips of guys getting hit in the nuts does not drive serious ad revenue ($500mm+). Youtube needs to do two things - add more long-form content where they can sell any sort of ads against and add more professionally produced content (of any length) that will drive more desirable traffic.
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Alex Har (URL) said:
Any kind of screening is bad idea. If everyone knows this is a free for all environment, they can take their chance at it. People can sue each other without the media owner(youtube) being implicated. Consumer and or Industry bodies may be set up to act as watchdogs. If there are complaints YouTube yanks the ad. Instead of ambulance chasing, Lawyers will become YouTube Watchers

On attractiveness of the media with or with screeening....there are conservative companies that have a media policy not to advertise in new publications. However if a new publication become hot quickly, o carry a message particularly relevant to the brand, media people may have to make an exception.

They can apply policies of the same genre to U-Tube content.

I hope media people and legislators will leave this area to evolve on its own. I believe it will in time achieve an acceptable level of self governance.
Ruben Zevallos Jr. (URL) said:
Well... 200 million is not bad, for a free service... but I think Google can wait for this new idea to be more mature, so the companies will see it as a good way to put their adds
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GoogleFanBoyNot said:
We are Google. Look our entire company is one big beta. Suckers. The financial industry bozos just got caught-- we are of course smarter than that. And those guys actually launched their products -- stupid. Just stay in beta, say that you own everything anyone produces with your products, and keep talking up free lunches. All is well.

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