Commentary: YouTube to Share Revenues—But With Whom?

I came across YouTube co-founder Chad Hurley’s recent announcement that the site will begin revenue sharing quite by accident. I was in Nova Scotia, driving through a blizzard and listening for the weather report on my way to a place where neither my cell worked nor broadband internet connections existed, when a radio announcer read the report and offered a bit of color commentary. With a day of travel ahead, I had plenty of opportunity to assess what the move might do to the industry—and the negative impact it may have on consumer-generated content.

But I’ll start with the positives. YouTube is right to figure out a revenue-sharing model for its content generators, for three primary reasons. First, the decision is wise since YouTube's success has been built on the foundation of consumer self-expression, whether lip-synched odes to a teen's favorite pop star or consumer talking heads defending YouTube's decision to self-police copyrighted or inappropriate content. These consumers, with varying levels of talent and tools ranging from cell phones to nonlinear video editing software, have created a great destination that ranks up there with eBay, Google, and the Drudge Report as a crack content/diversionary site.

Second, if YouTube doesn’t begin to share some of the wealth, it will lose market share to sites that do. Consumer-as-content-creator works for a brief period before the consumer returns to being a passive viewer, but consumer-as-content-creator who is paid to deliver compelling content is a sustainable model that may push YouTube into the ranks of the bona fide democratic delivery network that we’ve been waiting for since the inception of the web.

Third, YouTube has now vaulted its exposure—and that of its content creators—dramatically with Google’s announcement that it will use YouTube as its primary, and perhaps ultimately its sole, video repository, though for the moment Google Video remains a separate operation. The search giant, which bought YouTube last year for $1.65 billion in stock, is also making all YouTube content available via the GoogleVideo search engine. Estimates of ten times current exposure are not unreasonable, as Google searches will now yield, for instance, music videos from professional singers' websites as well as the knockoffs done by adoring fans. This increase in views will also increase ad revenues, as Google applies its secret for success to a viable video site after multiple failed attempts to do so with its own homegrown versions of Google Video.

On the flip side, YouTube's decision to share revenues raises four interesting issues that may reshape the way consumers as a whole think about content's value.

First is the question of how to value content. The simplistic answer is that value is determined by the number of views; a slightly less simplistic answer is that it is determined by the number of advertisement views or even click-throughs. But if the latter two models are used, consumers will at some point argue that YouTube is shortchanging their content by putting lower-ranking (and lower revenue-producing) advertisements side by side with the consumer's content. Besides the quality of ads versus the quality of content—which isn't currently an issue because revenue sharing isn't in full swing—think of the conundrum facing a church group posting an abstinence video that might be generate revenue from people clicking on ads that have as much in common with the church's message as does a global warming warning video with the polar opposite political opponent who might choose to manipulate particular keywords to get his own message across.

To properly address the value proposition, YouTube will need to redefine the language of value. In essence, while the consumer both creates diversionary content and consumes other content, of equal or lesser value, the value proposition for the content is as much a temporal as a qualitative algorithm. If it’s only the number of views or the number of click-throughs, YouTube’s going to be awarding the lion’s share of its revenue sharing to shock video content creators.