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The Sound of YouTube's Pirated Videos? Ka-ching!

YouTube as a money-maker?

Read on. First, let's establish some context. Anyone trying to build a content business on the web is (or should be) aware of a set of irksome contradictions:

  • Creating lots of truly original content is prohibitively expensive.
  • Aggregating content is easy, but establishing your value-add is hard.
  • User-generated content (UGC), though inconsistent in quality, is essentially free.
  • Both aggregation and UGC strategies raise difficult copyright and intellectual property issues.
  • Linking aggregated content back to its originator sends users away from your site (bad).
  • Most users are going to find your site via Google or other search engines.
  • Search-engine marketing (SEM) is the process by which you essentially purchase traffic via Google.
  • Once they find you, however, SEM users often "fly away" instantly. How do you hold them?
  • Until you turn the corner and see the following metrics improving, you can't project success...repeat visits, TOS/engagement, direct refers, organic search refers.
Now, there is no single solution to all of these issues, so a coordinated set of business strategies has to take all factors into account and craft a model that gives you the best shot at success in your market niche. Those of us doing this work for the past decade or more have longed for some new tools that would help us resolve contradictions and build better businesses.

Now, as so often before, comes Google. According to some of my favorite bloggers at ReadWriteWeb and VentureBeat, Google has been beta-testing a tool called Video ID or Content ID. Indeed, according to Google's own blog, this Content ID system can identify the content owners of videos uploaded to its YouTube site.

Now, stop and think about that. If true, a number of the contradictions mentioned above go away and -- presto! -- monetization becomes possible.

How? Again, according to Google, "90 percent" of the content owners it has notified about unauthorized postings of their video material on YouTube are choosing to let it remain there, rather than taking it down, which was the previous solution of choice. Why? Because Google shares ad revenue from the viewings on YouTube, which -- given the video site's virtual lock on web video -- is a much better path to making money than if the owners try to monetize this material on their own.

So the new formula works like this. Those ever-resourceful users go out and scour the universe for cool content; then upload it to YouTube. (So far: no cost to Google and no cost to the content owner.)
Then, via Content ID, Google identifies and notifies the copyright owner. (No cost to content owner.)
Finally, both Google and the content owner sit back and count up the money from ads displayed next to this pirated content, ka-ching, ka-ching, ka-ching. (Still no cost to content owner, just pure profit. Meanwhile, Google owns even more of the digital universe.)
Now, that sounds like a business plan!