The party, or at least the free party, may be coming to an end at YouTube. The rumor coming out of the Net 2.0 conference in San Francisco Wednesday is that the wildly popular viral video site is very close to running ads around its videos.
Variety quoted Wallstrip founder Howard Lindzon as saying YouTube could begin running ads as soon as next week. Lindzon denies saying it, but says in a note to PC World that he believes the ads are coming at some point. Wallstrip regularly posts its stock analysis videos on YouTube.
Here's the official line from Google/YouTube: "We are actively exploring a variety of ways to help the community to monetize content, and expect to announce something in the coming months that users will embrace," a spokesperson said Wednesday afternoon. "We will not comment on further speculation on programs we haven't yet announced."
Lindzon says he's in favor of a system where YouTube gives vloggers (video bloggers) the option to have ads wrapped around their videos, the revenues being shared 50-50 between the two parties.
It's no secret that Google is trying to figure out the right formula for turning YouTube's massive traffic numbers into massive profits. That's what Google does. YouTube says it serves up more than 100 million videos every day, yet the site brought in only about $15 million in revenues last year, analysts estimate. Weigh that against the $1.65 billion Google paid for YouTube and you can see why the ad-minded Google people are looking to get some ad revenues going. The trick is doing that without alienating too many of YouTube's loyal fans.
Here's a bit from the YouTube Fact Sheet: YouTube is pursuing advertising as its business model, and is exploring a range of possibilities including PVAs (participatory video ads) promotions, sponsorships, contextual-based advertising, traditional banner advertising, etc.
