How I would monetize YouTube

Mark Cuban has a blog post, in which he discusses YouTube monetization. He talks about how much it costs for Google to operate YouTube (just upoading, downloading, storing costs), and thinks that it might be significant. I don’t know the numbers, but I am sure Google spends a lot of money to this free service now that they have to do some screening (of porn and piracy) as well.

I have criticized the extreme version of ‘freekonomics’ before, in which it is argued that a lot of online service including contents like YouTube should be free because the marginal cost is almost zero. See:

• Is free special?
• Wrong - Paul Krugman, Chris Anderson, Lawrence Lessig, Mike Arrington. Contents should not always be free.
• Internet is not free
• In addition to free (Part 1: Free is not a cure-all) (and later parts)

The marginal costs can go very low, but never to zero. And there are other costs that may not be directly marginal, but very real. They are fixed costs and upfront investments. You can read my posts above if you are interested.

So, how should YouTube monetize? At the moment, they are doing all kinds of advertisings. OK, do that. But I think they are missing more direct opportunities. Here are my ideas.

Charge viewing over certain amount

I suggest this, because I sometimes feel sorry to YouTube. I enjoy YouTube a lot, and sometimes use it as a background music player not even watching the video.

They can charge some dollars above certain threshold, and that will be reasonable to everyone. I am sure they have done some analysis, and my bet is that 80/20 applies here (a small % of users consume a significant % of the network and storage).

Enable priced contents

Again, I am suggesting this because I feel sorry to the content creators. I watch (or listen) music videos a lot, but I don’t think I pay back to the creators in any way.

So, give the content owners the option of making a content priced. YouTube can share certain % margin for this option. I have experienced some music videos disappearing, and I guess some of this may have to do with copyright issues. Right now, the only options for the content owner are either making it available for free or making it unavailable. I think if YouTube gives another option of making it available for a price, there will be more good contents.

Charge embedding copyrighted content

Some YouTube videos have embedding disabled. I don’t know for sure, but I guess they do this to preclude copyright infringement. But often they were the contents that I wanted to share. So, how do you make this work? Let me do it, but at a price.

There are some different ways to do this. First is to charge me (the embedder) directly. YouTube can charge a fixed fee, or they can invoice based on viewership.

Another way to do this is to charge the viewers. This needs integration with the priced-content model that I suggested above. Basically, YouTube can use me as the content retailer. In this case, I may be free to embed or even be paid to do it.

That’s about it now. I don’t know if Google has not thought about these direct models or not. But I hope Google to do now.

Good luck.