Premium Content Deals Herald Changes for Google and YouTube

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In the wake of Google’s recent publication of results they have revealed major content deals with big hitters such as Sony Pictures, Hollywood Studios and MGM that will surely herald a new dawn in online content and provide a boost to some lagging revenues. But at what cost to us?

Google may have shown a slight decrease in overall growth but some areas such as paid search still showed impressive figures, 17% year on year growth of paid clicks across Google.com and its partner network and 3% up on Q4 2008.

But as we know the online world is evolving at a startling rate and Google will be quick to capitalise, looking further than SEO and PPC solutions. YouTube is way ahead in terms of online video content but is looking over its shoulder at online TV sites such as Hulu that is gradually building impressive viewing figures with premium content.

It is a concern for YouTube as to how to generate the necessary revenues to maintain success. Inserting paid ads in between programmes as well as pre and post roll ads will offer a premium content deal that will give YouTube a great chance of generating some decent revenue streams.

Google, however, will not rest on their laurels when it comes to ad revenue generation and looks likely to develop subscription models to keep a steady flow of cash rolling in the right direction. With such models our fear is that ultimately everyone will have to pay to view certain online content, albeit probably micro payments initially, but certainly laughing in the face of the idea that all online content should be free and available to all.

Everyone knows that print newspapers are our generations horse-and-buggy; in the most wired cities, they’ve been pummelled by competition from the Web. But it might surprise you to learn that one of the largest and most-celebrated new-media ventures is burning through cash at a rate that makes newspapers look like wise investments. It’s called YouTube: According a recent report by analysts at the financial-services company Credit Suisse, Google will lose $470 million on the video-sharing site this year alone. To put it another way, the Boston Globe, which is on track to lose $85 million in 2009, is five times more profitable—or, rather, less unprofitable—than YouTube.

Google doesn’t break out YouTube’s profits and losses on its earnings statements, and of course it’s possible that Credit Suisse’s estimates are off. But if the analysts are at all close, YouTube, which Google bought in 2006, is in big trouble. As Benjamin Wayne, the CEO of the rival video-streaming company Fliqz, pointed out in a recent article for Silicon Alley Insider, not even Google can long sustain a company that’s losing close to half a billion dollars a year.

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