Are YouTube’s daring efforts to become a television carbon copy earning them the big bucks? Citigroup analyst Mark Mahaney thinks so.
In fact, he predicted to AllThingsD by the end of the year that YouTube will generate more than $3.6 billion in revenue from advertising and other sources. Google—owner of YouTube—will probably keep about $2.4 billion after sharing it with partners and other associated costs.
Mahaney is obviously betting that YouTube’s aggressive approach to advertising on videos and that the original channels on YouTube will work, despite the fact that Internet experts recently said that 90% of them will fail. In addition to courting advertisers by making YouTube more like television, the Google subsidiary recently pondered the idea of a subscription model for some of its channels, smaller cable channels, and possibly its more popular independent content.
So where does the big windfall potentially leave partners? They can share up to $1.2 billion of that end of the year revenue. If all partners were treated equally and had the same amount of views, it would translate roughly to $40,000 per partner.
We can only speculate that most of the partner money may go towards helping its 100+ original channels stay afloat. If that’s true, that would put creators at a disadvantage because instead of fostering and nurturing new content that will surely arise in the future, it would go towards helping its own 100+ channels. In a way, that makes the playing field unbalanced and will only turn away creativity.
Whether partners will get their fair share or not, the $1.2 billion revenue for YouTube’s partners is a sign that the road may be paved with gold in the future. YouTube will have to find ways to make money out of its offerings and in return give a generous share of revenue based on performance and potential growth. If it holds true and if it consistently brings success, YouTube will groom the next generation of entertainers and become a bigger threat to traditional media.
Expect a few more YouTube stars earning six figures in the near future, YouTube trying to cover its fledgling channels and many, many more pick and choose ads for the rest of us.