YouTube to sell music, games to drive revenue

YouTube plans to sell music and video games and to experiment with new advertising formats to generate more revenue, executives said Tuesday.

The video sharing site is now tapping into e-commerce by selling media-related products featured on the millions of videos, including music, films, TV shows, video games, books and concert tickets, Reuters reported.

Users can purchase songs from music videos they view on YouTube by clicking on buttons, which will direct them to Amazon’s MP3 store or Apple’s iTunes store. They can also buy video games through the Amazon link.

Amazon and iTunes will share revenue with YouTube, Reuters reported.

According to Piper Jaffray Research’s estimates, YouTube could earn about US$200 million in revenue in 2009, compared with those of around $27 billion for Google.

YouTube currently has ad sales as its key income source. It has been experimenting with several formats to take full advantage of its massive popularity of the site, according to Reuters.

In August 2008, YouTube had 330 million visitors, according to comScore.

One format YouTube is experimenting with is InVideo advertising, which shows text ads to play under the videos. Others include contests sponsored by advertisers and home page video ads, Reuters reported.

According to YouTube executives, pre-roll advertising, where a 10- to 20-second ad runs before a video starts, is “not always the best format for some of the shorter video clips on YouTube.” However, they did not rule out using pre-roll ads altogether.

The company is also trying to take advantage of its video ID system, which notifies content owners, such as music and TV producers, when copies of these video clips are uploaded. Then the content owners can share in advertising revenue generated from the copied clips.

The content owners could also remove the copies by using the video ID system, Reuters reported.