YouTube Ads Turn Videos Into Revenue

By CLAIRE CAIN MILLER – New York Times – Technology

SAN BRUNO, Calif. — Last month, a YouTube user, TomR35, uploaded a clip from the AMC series “Mad Men” in which Don Draper makes a heartfelt speech about the importance of nostalgia in advertising.

Viewers wouldn’t notice, but that clip also makes an important point about modern advertising — YouTube is an increasingly fruitful place for advertisers.

In the past, Lions Gate, which owns the rights to the “Mad Men” clip, might have requested that TomR35’s version be taken down. But it has decided to leave clips like this up, and in return, YouTube runs ads with the video and splits the revenue with Lions Gate.

Remarkably, more than one-third of the two billion views of YouTube videos with ads each week are like TomR35’s “Mad Men” clip — uploaded without the copyright owner’s permission but left up by the owner’s choice. They are automatically recognized by YouTube, using a system called Content ID that scans videos and compares them to material provided by copyright owners.

Those two billion views, a 50 percent increase over last year, according to the company, are just 14 percent of the videos viewed each week on the Google-owned site. But that’s enough to turn YouTube profitable this year, analysts say.

“YouTube is a big component of our display revenue, and display is our next big business,” Eric E. Schmidt, Google’s chief executive, said in an interview.

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