Piper Jaffray analyst Gene Munster proposed an interesting suggestion to help YouTube with its finances: He said the Google-owned video-sharing site should charge a “nominal fee” for uploading videos if the content isn’t advertiser-friendly, The New York Times‘ Bits Blog reported.
Munster estimated that YouTube will earn $323 million from advertising in 2009, primarily from large companies such as Verizon Communications, Disney and Microsoft. But he also estimated that the costs of storage and streaming come in at more than its revenue.
We believe YouTube could develop a hybrid model where it charges a portion of users to upload their videos. YouTube could develop technology based on its current Video Identification technology to protect copyrights to determine whether advertising could be sold against the video to be uploaded. If the algorithm deems Google could not monetize the video through advertising, it could require the user to pay a nominal fee to upload the video to the site, which could be based on the average lifetime cost of streaming for a given video.
We recognize such a strategy would change the culture around the site and some users would likely go elsewhere to upload videos; however, we argue that if users were to flock elsewhere to upload videos for free, the scale problem would then become another company’s worry, and that company would inevitably not have the strength of Google behind it.
We believe that if Google ever intends for YouTube to contribute significantly to its bottom line, the company needs to consider additional methods to charge its users, not just advertisers.