YouTube founders: Video ads coming

At the D5 conference, YouTube founders (and now Google employees) Chad Hurley and Steve Chen were just interviewed by Walt Mossberg. In a wide-ranging interview, Hurley and Chen discussed today's EMI deal, copyright issues, and advertising. Some highlights:

The EMI deal

Regarding the deal with EMI, Hurley said it will open up opportunities for YouTube users, although in a somewhat backward fashion: "It's about creating new marketing opportunities," he said. Music rights holders will be able to "identify when their music is being used, and earn revenues against that." Presumably the revenues will be from advertising, since this will "give users a free and legal way to use" this media.

In practice, it will work with YouTube's audio swap tool, which Hurley said is being expanded and improved.

Copyrights

Walt tried to nail the founders on their apparent laissez-faire attitude regarding copyrighted material. Hurley said, "In early 2006, we were the first to release content management tools, a way for people to identify their content with metadata." Also, he says, "We've done a good job of educating people on copyright law."

Walt: "Wait. Wait. Wait."

Hurley relents a bit: "We see this as a search algorithm [issue]. We're running trial with audio and visual fingerprinting." In the Fall, he said, "everyone will have access to these advanced tools."

But, he added, "It's hard for us. Media companies upload content one day, and then the next, their lawyers make us take it down." He continues, "We're providing distribution."

Clearly, not all content owners see it that way. Immediately after the YouTube interview, Kara Swisher interviewed Viacom CEO Philippe Dauman, who stood by his company's $1 billion lawsuit against YouTube.

Money from Mentos

Walt asked Hurley and Chen about the business of streaming video. Is there real money to be made? Hurley: "Yes, of course. Advertising. Google is a perfect fit. They know better than anyone how to monetize the Web."

So what kind of ads will we be seeing? "There will be a variety of options," Hurley said. "We're testing them now. We don't think that forcing someone to watch an ad is the best way." Steve Chen added: The length of the ads matters. "I think the optimal is somewhere between 5 and 10 seconds... and making it as relevant as possible."

Chen and Hurley indicated that the people posting content will be making the choice of putting ads on their content or not. "People have to opt in, and we're running tests on the site. Within the next few months, we'll be rolling out more video-centric advertising on the site. We hope we're adding value and don't interrupt the user experience."

Hurley is pretty clear that they haven't cracked the monetization code for YouTube yet: He said he doesn't have "preconceived notions of what we should do. By listening, we've been able to build a better product," and he plans to do the same with the monetization strategy.

More features coming

YouTube will become more of a resource for users, as well, beyond just a place to share videos with the world. Walt asked about the concept of YouTube building a "vault," for users to store their archived videos. Chen: "Any problems consumers encounter with video, we're going to provide a solution."

For another take, see coverage from Dan Farber at ZDNet.