Rich Fiscus
17 Jun 2008 20:05
Many companies have tried and failed to emulate YouTube's success at capturing an audience. But despite their undeniable popularity there's one thing the viral video leader has yet to accomplish. They haven't made a single penny in profit.
At the Supernova technology conference YouTube's Director of Content Partnerships Jordan Hoffner was brutally honest about obstacles to attracting sponsors.
He said "We've seen that because of the increased fragmentation of audiences, brand advertisers that we deal with - Coca-Cola, Proctor and Gamble, General Motors - feel like they're missing something. They want to know how you reach a large number of people with a small amount of money."
Maybe the larger issue is that he assumes a lack of understanding is at fault, rather than a flawed business model. Maybe a service like YouTube needs to be an add-on to another business in order to make money. Having an interesting product is great for attracting traffic, but not all traffic can drive revenue.
In the case of YouTube they seem to be running into the perception that becoming more commercial means not being YouTube any more, and maybe that's a fair criticism. If so, it means that in order to have advertising it needs to somehow blend into YouTube's existing service instead of altering the service to include advertising.
If anyone has figured out how to do that they haven't let YouTube in on it.