Google is no doubt thrilled to let YouTube be known as a financial folly. In the dangerous waters of online content, a whiff of potential profit is an irresistible lure for predators such as copyright lawyers circling user generated content monetization and content partners that are all too ready to turn on their distributors in a feeding frenzy.
YouTube is a turnkey solution to a highly profitable content monetization strategy that can be unleashed as soon as Google gains stronger control of its content partners. On this point, we agree with Credit Suisse: the unit economics work. We’ve researched and launched video monetization strategies that are profitable at a much smaller scale. Forgoing investment in the online video market because of Google’s shell game with content providers is a decision that many prospective investors will stand to regret.