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YouTube ads turn piracy into revenue
Studios changing their tune on copyright violations as ad revenue-sharing grows
Claire Cain Miller
San Bruno, Calif. — The New York Times News Service
Published on Friday, Sep. 03, 2010 9:31AM EDT
Last updated on Friday, Sep. 03, 2010 9:32AM EDT
Last month, a YouTube user, TomR35, uploaded a clip from the AMC series “Mad Men” in which Don Draper makes a heartfelt speech about the importance of nostalgia in advertising.
In the past, Lions Gate, which owns the rights to the “Mad Men” clip, might have requested that TomR35’s version be taken down. But it has decided to leave clips like this up, and in return, YouTube runs ads with the video and splits the revenue with Lions Gate.
More than one-third of the 2 billion views of YouTube videos with ads each week are like TomR35’s “Mad Men” clip – uploaded without the copyright owner’s permission but left up by the owner’s choice.
Those 2 billion views, a 50 per cent increase over last year, according to the company, are just 14 per cent of the videos viewed each week on the Google-owned site. But that’s enough to turn YouTube profitable this year, analysts say.
“YouTube is a big component of our display revenue, and display is our next big business,” Eric E. Schmidt, Google’s chief executive, said in an interview.
In the past year, the video site has become a significant contributor to the family business at a time when Google, which makes more than 90 per cent of its revenue from text search ads, is seeking a second act. Though Google does not report YouTube’s earnings, it has hinted that it is hovering near profitability.
For a long time, YouTube executives spent their time across conference tables with lawyers worried about copyright violations, said Chris Maxcy, YouTube’s director of content partnerships.
“Now the partners we are working with get cheques that get bigger every month,” he said.” And now when you walk into a meeting there’s almost no lawyers, or there’s a couple of lawyers but they are deal lawyers there to help you get your contract done.”
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