YouTube is negotiating with the major American movie studios that could
launch a global pay-per-view video service by the end of the year, The Financial Times is reporting.
This could be the video service's big break more than four years after being acquired by Google. The combined power of YouTube's popularity and Google's dominance in search technology could create a new revenue model to replace falling DVD sales. But what does it mean for the homemade videos - the cat videos, the on-the-street news footage, the Rickrolls - that are YouTube's soul?
YouTube must be frustrating for Google sometimes. Google bought the company in 2005 for $1.65 billion, but the site's main revenue is generated from ads shown before, after and on top of user-submitted videos and on the site. Forbes estimated YouTube's revenue to be $200 million of Google's $13 billion in 2008. Consider that lawsuits have been filed against the site claiming in excess of $1 billion in damages due to copyright infringement, and YouTube almost seems like more trouble than it's worth.
The number of YouTube users and the amount of content they upload is growing rapidly - YouTube announced in May that 24 hours of video are being uploaded every minute - but those views are not turning into gold. Kind of like how you can create a video that gets a million views and never see real money (the obvious exception being when it leads to a music career).
Teen pop star Justin Bieber got his start with a homemade video on YouTube. Now his videos are professionally-produced - and his single is the most viewed video of all time.
YouTube is immensely popular so Silicon Valley logic follows that it must be potentially immensely profitable. And it may be, one day, if Google keeps rolling out features like the video rental service that debuted in April or the pay-per-view scheme being buzzed about today.
But there just doesn't seem to be any money in cat videos. Just three of the top ten most popular videos of all time on YouTube are homemade. And notice how the YouTube logo on the site no longer says "Broadcast Yourself"?
What do you think? Will YouTube's emphasis on pay-per-view Hollywood movies diminish it as a tool for the user-uploaded movies we've come to love?