Facebook Inc. Chief Financial Officer Gideon Yu has joined the board of Vobile Inc., a closely held provider of so-called fingerprinting technology for identifying video content.
Mr. Yu, 36 years old, joined the online social-networking firm in July from YouTube, the video-sharing site owned by Google Inc.
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So, Google's YouTube will finally sell video ads. How much revenue will they generate?
Let's run the numbers.
- YouTube is testing overlay ads that run along the bottom of videos. If viewers click on these ads, the videos they are watching will pause, and the ad will launch.
- YouTube will only run ads on videos from signed content partners (for now).
- In tests, approximately 75% of viewers presented with an ad chose to watch the whole ad.
- Google plans to begin by charging a $20 CPM.
Combining this information with Comscore's finding that YouTube streamed 1.7 billion videos in May, we can construct a basic range of revenue estimates.
ASSUMPTIONS
For our initial scenarios, we make the following assumptions:
- Google streams 2 billion videos a month (up modestly from the May numbers)
- A sub-set of this group are from content partners and will eventually have ads (we'll run a range of 10%-50%)
- A sub-set of this group will have ads that are actually watched (we'll run a range of 33%-75%.
- In tests, 75% of videos were watched, but this was likely heavily influenced by the curiosity factor. In the early banner ad days, banner click-through percentages were high, too).
- The ads will be highly targeted, full-motion video, and should therefore command a high CPM (we'll run a range of $10-$50).
RESULTS
We ran five scenarios, from Conservative to Aggressive (please see this page for details). In the Conservative scenario, YouTube generates about $8 million in revenue, less than 1/10th of one percent of Google's overall revenue ($16 billion). In the Aggressive scenario, the company generates about $450 million of revenue--enough to make a meaningful contribution, but barely.
FIVE YEARS FROM NOW
We also ran scenarios using a far higher number of monthly streams (range: 10 billion to 50 billion), a greater percentage of ad penetration within videos (range: 50% to 70%), and a similar percentage of ads watched as in the above scenarios (range: 33% to 60%). Here, the revenue is far more meaningful. In the Conservative scenario, YouTube generates $200 million of revenue: nice, but nothing to write home about. In the Aggressive scenario, however, the company generates $13 billion of revenue--closing in on Google's current revenue today.
BOTTOM LINE
In short, YouTube's revenue won't likely be material to Google for at least a year or two and possibly more. The impact on the bottom line, moreover, will probably be even less pronounced: Serving a video ad, even for Google, is far more expensive than serving a text link. At a $20 CPM, the gross margin on such ads will likely be well below Google's current margins.
God bless user-generated service journalism. This video, by a 21-year-old student named Jimmy Ruska, explains how to use Google to quickly and efficiently find music files. The video has been viewed over 400,000 times since it was posted in April.
Recent speculation and stories like this Wall Street Journal article or this Reuters report on YouTube's use of video identification tools made us think it would be useful to clarify what we’re doing. We’ve been developing improved content identification for months, and we’re confident that in the not-too-distant future, we’ll unveil an innovative solution that will work for users and content creators alike. This is one of the most technologically complicated tasks that we have ever undertaken. But YouTube has always been committed to developing sustainable and scalable tools that work for all content owners.
Even though we haven’t given too many details, we’ve been hard at work. Earlier this year we implemented audio fingerprinting technology from Audible Magic, to help identify the audio content of music partners like Warner Music, Sony BMG, and Universal. Today we're experimenting with video identification tools, and will share with you a few core principles driving our technology development, past and present.
We are beginning tests on an automated system to identify and match specific videos. The technology extracts key visual aspects of uploaded videos and compares that information against reference material provided by copyright holders. Achieving the accuracy to drive automated policy decisions is difficult, and requires a highly tuned system. Once accuracy is achieved, the challenge becomes speed and scale to support the millions of people who use YouTube every day. We are working with some of the major media companies to test what we have developed. We’re excited about the progress so far, and we’re dedicated to making these tests successful, but as always with cutting-edge technologies, there’s no guarantee of success.
Now, when it comes to spotting pornography and graphic violence, and other content prohibited by our terms of use, nothing beats our community flagging. Once a user flags a video, we immediately review it and remove it if we find a violation. But our community can’t identify infringing content. We all know pornography and violence when we see them. But copyright status can only be determined by the copyright holder. That is because almost anyone who creates an original video has the copyright for that work, and such a wide range of copyright holders' preferences vary widely.
Some copyright holders want control over every use of their creation. Many professional artists and media companies post their latest videos without telling us, while some home video-makers don't want their stuff online. Some legal departments take down a video one day and the marketing department puts it up the next. Which is their right, but our community can’t predict those things, and neither can we. The same is true for technology. No matter how good our video identification technology gets, it will never be able to read copyright-holders’ minds.
If a content owner identifies material that she doesn’t want on YouTube, she can request its removal with the click of a mouse. If particular users repeatedly infringe copyrights, we terminate their accounts. We have long made a practice of creating a unique "hash" of every video removed for alleged copyright infringement and blocking re-uploads of the hash. We educate users on what is and isn’t permissible under the law. Our upcoming video identification system will be our latest way of empowering copyright holders, going above and beyond legal requirements.
We’ll continue our focus on delivering a great user experience. YouTube's no-fuss upload lets video artists collapse the gap between the creative moment and its worldwide publication. It helps our hundreds of media partners - as well as marketers and advertisers - spread their hottest work while it's still hot. And it enables presidential candidates participating in our YouChoose 2008 program to engage in a direct, open dialogue with voters, bringing transparency, access and authenticity to the political process. We’re carefully designing our new identification technologies to not impede those free and fast forms of expression.
In conclusion, a content management system has to have technology that provides high quality matching and detection, but it also has to apply business rules in ways that support the business objectives of partners while providing high quality user experiences. With the introduction of our video identification tools, YouTube will continue to be the leader in online video, and the premier destination for watching and sharing original videos worldwide. Now, back to work…
Top online video service YouTube will soon test a new video identification technology with two of the world's largest media companies, Time Warner and Walt Disney.
The technology, developed by engineers at YouTube-owner Google, will help content owners such as movie and TV studios identify videos uploaded to the site without the copyright owner's permission, YouTube legal, marketing and strategy executives said in an interview on Monday.
The so-called video fingerprinting tools will be available for testing in about a month, a YouTube executive said.
Initially, YouTube said last year such tools would be made available to test by the end of 2006. But executives have said the reliable identification of content was a complex task that required it to develop its own technology tools.
Chris Maxcy, YouTube partner development director, said other media companies planned to test the technology, but he declined to name the other parties.
These tools will be made available to all content owners later this year.
Full article.
Audio and visual fingerprinting of copyrighted video is seen as the best way to combat infringement, but in NewTeeVee’s testing this week across multiple sites, it did not work. We were surprised to be able to upload multiple times the exact same copyrighted file, even after we explicitly told the hosting site and the fingerprinting provider about it and they took it down.
Microsoft recently took its Soapbox user-contributed video site out of the public eye until it could implement filtering technology from Audible Magic. Last Friday, it relaunched, supposedly armed and ready to fend off copyrighted content. So we asked our intrepid reporter Craig Rubens to test how the system worked by uploading a Daily Show clip.
Surprise, surprise, the clip went up like a charm. We called Microsoft to ask what was going on. You should talk to Audible Magic, they said; our system is only as good as their index. We called Audible Magic, who essentially blamed Microsoft, for only implementing the audio version of its software. The reps then set off to nail down statements from their companies, a process that took most of the week.
Only sometime last night did the clip finally get taken off Soapbox, replaced with a copyright violation notice. To see if the system had been corrected we uploaded it again today, and again it appeared about 40 minutes later. At this point, if all went as it was supposed to, the video should have been automatically added to the index of banned clips, and then rejected when we uploaded a duplicate. But again, we had no problem.
Concerns about whether digital fingerprinting is ready for action have persisted, and market leader YouTube has hesitated to deploy its “Claim Your Content” system while it is being perfected. However, confidence in fingerprinting has moved past the optimism stage. “This technology works,” says MPAA Vice-President Dean Garfield, as reported by BusinessWeek.
Audible Magic has bagged most every high profile deal in video filtering: MySpace, Dailymotion, Break.com, and GoFish/Bolt.
The Audible Magic representative insinuated the company’s technology was deployed in fuller form on MySpace — which recently launched its “Take Down Stay Down” and filtering system using AM’s system — so we also tried uploading the clip there. Interestingly, that also posed no problem.
Here are the official statements Microsoft and Audible Magic sent yesterday after days of deliberation and phone calls about the issue.
By Greg Sandoval
Staff Writer, CNET News.com
Published: April 16, 2007
LAS VEGAS--Google is very near enacting a filtering service that would prevent copyright content from being uploaded to video-sharing site YouTube, CEO Eric Schmidt said Monday.
Schmidt made the comments to about 300 people here at the National Association of Broadcasters conference during a one-on-one interview with John Seigenthaler, the former reporter with NBC's Nightly News.
The new system, which he called Claim Your Content, will automatically identify copyright material so that it can be removed, Schmidt said.
The New York Times dubs it "content-recognition software"; others call it video fingerprinting. The idea is to create a kind of digital dragnet that would allow copyright owners to prevent snippets of their work from being uploaded to video-sharing sites, or circulated around the Net.
Who's developing this technology? Here's my short list:
- Advestigo (FT article ... NewTeeVee)
- Attributor (WSJ article)
- Audible Magic (Post-Gazette.com ... AP article)
- Gracenote
- GUBA's Johnny (Broadcasting & Cable article ... TechCrunch posting)
- Philips (PC World article ... Philips explainer)
- YouTube
