Paying YouTube content creators easier said than done

CEO Hurley said the site will compensate video creators, but copyright issues and YouTube's huge inventory complicate the plan.

Paying YouTube content creators easier said than doneUnlike many who post widely watched content on YouTube, Stephen Voltz and Fritz Grobe were angered by their video's popularity on the site.

Fans had posted the clip, "The Diet Coke & Mentos Experiment," at YouTube without permission. Voltz and Grobe were flattered, but the "Mentos" video earned $30,000 at Revver.com, another video-sharing site that pays content creators, and the pair believed they could have doubled that total had the clip not been made available for free on YouTube.

In the future, a budding video auteur trying to turn a buck may not have to worry about YouTube siphoning traffic. YouTube Chief Executive Chad Hurley told an audience at the World Economic Forum in Davos, Switzerland, last weekend that the video-sharing site plans to compensate video creators.

Hurley stopped short of saying how exactly YouTube plans to do this, but industry experts and competitors who are already paying for their content say the devil will be in the details for such a large site, which sees 30 million visitors per month.

The No. 1 question industry insiders are asking is whether someone can profit from posting clips from episodes of Friends or Lost or other material that doesn't belong to them. Clearly, YouTube, which tells users they don't want copyright-protected material illegally posted on the site, doesn't want to end up paying people for posting what someone else owns. But with such a big audience, experts say, YouTube will need to install a system that accurately tracks and handles payments to a massive list of posters. The company says that more than 60,000 clips are uploaded to the site each day.

"I'm sure they are working on a plan but it's certainly not a trivial undertaking," said Allyson Campa, vice president of marketing for Metacafe, which shares advertising revenue with video creators and is among the top 10 most-trafficked video-sharing sites. "The tricky thing is the rights issues."

Will "audio fingerprinting" work?
Copyright issues have plagued YouTube almost since the company officially launched in December 2005. YouTube allows anyone to post anything at any time. Only after a video is flagged by the community and YouTube employees have had a chance to review whether a clip is pornographic or unduly violent or violates a copyright will the company yank a video. YouTube doesn't do any prescreening.

That's a crucial difference between YouTube and most of the sites that already share revenue, said Oliver Luckett, one of Revver's cofounders. Metacafe and Revver screen clips before they go online so they aren't paying for pirated material. The screening process should guarantee that ads will appear alongside clips that are appropriate to an advertiser's message.

YouTube would have to figure out a way to similarly screen videos, said Campa and Luckett. This will require a "total overhaul" of YouTube's operations, Luckett predicted. YouTube has for months been promising an audio fingerprinting technology that can identify copyright material but the technology hasn't yet been rolled out.

Of course, there's a very good reason for Campa and Luckett to point out potential hiccups: Hurley & Co. paying content creators could be the final nail in the coffin for their besieged competitors.

For a plan like this it's difficult to make a profit unless you beef up the advertising model.
--Josh Bernoff, analyst, Forrester Research

"I'd be a little bit worried if I was one of these YouTube competitors," said Josh Bernoff, an analyst with Forrester Research. "Everyone should get nervous anytime an 800-pound gorilla says that they like the way you look."

That said, Bernoff agrees that YouTube will need to make adjustments.

"For a plan like this it's difficult to make a profit unless you beef up the advertising model," Bernoff said. "You need banners or pre-roll advertisements (ads that appear prior to a video clip) and YouTube has resisted pre-rolls. It makes you wonder whether they are preparing to make a change."

Hurley said as much in an interview with the BBC last weekend. YouTube is considering whether to ask users to watch a three-second ad before watching a video, Hurley told the BBC.

Pinpointing exactly how much advertising and site censorship a video-sharing audience will tolerate is pivotal, said Luckett.

"The problem is that you can kill your traffic by instituting these policies," said Luckett, who left Revver in December and is now working on his own online video project. "You are asking an audience to accept more restrictions. Any time you do that or the second that you put in any form of censorship you drive some people away."

YouTube executives don't appear worried. They have clobbered their video-sharing opponents, many of whom hold less than 1 percent of the market while YouTube boasts nearly half.

Joe Eigo, an acrobat and stuntman, was surprised by the ability of his videos, which show him doing a series of flips, tumbles, and martial arts moves, to generate $26,000 on Metacafe. He thinks that when YouTube starts paying, his earning potential could skyrocket.

"My videos got a lot of exposure on YouTube," said Eigo, 26, who is from Toronto. "They were a lot more views and traffic."

YouTube, which was acquired by Google last year but is operating as an independent business unit, issued a statement on Monday that offered no details about how the company's payment program will work but did note a proven track record and Google's success at generating money for customers.

"In the same way that Google has worked with publishers and content creators to make money online, YouTube will begin to help our community to monetize the content they create," the statement read.

That's the kind of promise that whets the appetite of even YouTube critics such as Voltz.

"I kind of want to wait and see," he said. "I wasn't pleased with their old model, which made them over a billion dollars without paying creators a dime. There's no denying that they got the eyeballs. If YouTube splits the ad revenue in an equitable way there could be some real money involved."

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