YouTube: profitable in 2010

Cable Congress 2010 – Brussels. Speaking before a packed house, Patrick Walker, director of partnerships, YouTube/Google, said he expected the online video service to be profitable this year.

Is YouTube a friend or a foe? It maybe easy to downplay the importance of kids just watching short form videos, but the figures are dazzling. One billion views a day, 20 hours of new video uploaded every minute, 300 million users world-wide.

Remember, YouTube is only 5 years old. “The pace of change is scary” said Walker. “Radio took 37 years to reach 50 million users, television 15 years, cable six years and the internet just three years. And forget loyalty with online users, “The cost of switching preferences is zero, just look at how big MSN was just 4.5 years ago and how fast Facebook has risen.”

YouTube’s big challenge will now be to monetise its success. In order to achieve this, new ways have to be found. “Remember when television started, the first commercials were only radio jingles with pictures.” The same has to happen with online video. A perfect example of this are the Evian Roller Babies, with 85 million views most watched Internet ad in history.

“But it is not just revenue at traffic point”, said Walker, “We can help sell CDs and DVDs.” When Susan Boyle’s album came it, it established a record for pre-release sales at Amazon UK and it was six weeks number 1 in the US – without the show ever being broadcast there.

Of course, these are one-off examples. One way to monetise content could be to have long form videos on the portal. In the UK, YouTube now has agreements in place with Channel 5, Channel 5 and BBC Worldwide to have thousands of long form videos available.

On order to make full use of online videos on the web and on the TV, Walker said he supports a hosted model rather than an embedded model. “The current embedded application model doesn’t scale, it doesn’t allow services to be updated and adapt to users. And it is missing the web’s established ad infrastructure. User expectations are getting too high for walled gardens.”