Happy Birthday, YouTube! Now, Get Back to Work and Make Money

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YouTubeHappy Birthday, YouTube!

Google's (GOOG) fast-growing YouTube turned 7 on Monday. The world's most popular video-sharing website has come a long way in its brief life. Many of its milestones and metrics are jaw-dropping.
  • There are 72 hours of video uploaded to the website every minute.
  • YouTube receives 800 million unique visitors a month, who consume 3 billion hours of clips.
  • There are now tens of millions of channels, and subscriptions to the content channels have increased 50% over the past year.
Despite all of YouTube's achievements, this is really only the beginning.

For the sake of Google investors who have seen the search giant try to monetize its website more effectively without alienating users, let's go over a few of the things that can turn YouTube into a monster moneymaker for the world's most valuable Internet company.

Time to Really Monetize the Masses

Three years ago, I was invited to the YouTube Partners program. Since then, the number of partners that YouTube has accepted to its program -- where those uploading original videos that are viewed by reasonably sized audiences can enter into ad-sharing deals through Google -- has grown. YouTube has also expanded the program to let some nonpartners monetize some of their viral videos.

I was one of the lucky ones -- an early arrival on YouTube with modest success as a content creator. Now YouTube needs to make it even easier for its tens of millions of channel creators to make money on the website, and there are plenty of ways to make that happen.
  • Put out a tip jar: Google has tried to compete with eBay's (EBAY) PayPal as a transactional platform with Google Checkout, but it has a long way to go. One thing it could do is incorporate virtual tip jars on YouTube channels. Getting interested content creators to sign up for Google Checkout accounts and encouraging viewers to contribute would go a long way toward popularizing the platform.
  • Kick things up Kickstarter style: Kickstarter.com is a fast-growing website that allows entrepreneurs and artists to raise money for projects. It's the poster child of "crowd funding" where visitors vote with their pocketbooks on what they want to see materialize and receive perks for financials participation. YouTube has launched its own funding efforts to nab proprietary content, but it needs to reverse the process and let viewers interact with compelling projects.
  • Get more action from ads: Google rocks in paid search. It's a beast in sizing up text on website pages and serving up contextual ads that are relevant. It's harder to pull that off on an eye-candy platform. Google could be serving up better ads if it got to know its video content a little better. YouTube needs to encourage more descriptive text -- whether this is a matter of easier integration with its own Blogger, educating partners on the power of accurate words, or staffing a fleet of compensated reviewers for high-traffic clips. It's understandable why YouTube just doesn't flip the switch and let every channel owner generate click-based revenue. Gaming the system and the uploading of unauthorized content are big enough problems already. (The last thing that YouTube needs is to pursue monetization at the expense of the credibility of Google's ad platform.) However, YouTube can do a better job of working with cost-per-action ads where advertisers only pay if something is actually sold or a lead is genuinely created.
In the end, it's about incentivizing content creators, but also engaging viewers in interactive ways.

Follow Netflix Into Premium Video Subscriptions

YouTube's success has translated perfectly into mobile, where viewers crave the short-form clips that the website provides. We're talking about 600 million playbacks a day on mobile devices!

The problem with YouTube -- as a business -- is that it's serving up chunky media files to 800 million largely freeloading customers where putting up with ads isn't always enough.

Netflix (NFLX) didn't begin streaming until a year after YouTube was born, yet it's up to 26 million global streaming accounts. Imagine what a successful premium streaming service could do for Google TV or its hairy relationships with hesitant movie studios and TV producers.

YouTube can never lose the free side of the video-sharing site, but it needs to exploit its mobile magnitude before Netflix runs away with the market.

It doesn't have to end there, of course. Google can take a page out of the original MP3.com playbook with the New Music Army program of incentivized promoters. It can arm video makers with even better authoring tools, and make the clips more engaging with polls and other embedded features.

YouTube will get there, but let's hope that it's as impatient as most 7-year-olds and evolves quickly.

Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article, except for Netflix. The Motley Fool owns shares of Google and Netflix. Motley Fool newsletter services have recommended buying shares of Netflix, eBay, and Google.


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Elcor

YouTube's success is partly due to letting other websites use their videos. One clear example is http://www.NubloBits.com that allows people search and discuss the same YouTube videos live.

May 22 2012 at 9:28 AM Report abuse rate up rate down Reply