YouTube to share ad money with more video makers

NEW YORK Tue Aug 25, 2009 4:53pm EDT

Chad Hurley (L) and Steve Chen, co-founders of YouTube, which was acquired by Web search leader Google Inc. for $1.65 billion last year, pose after a news conference in Paris June 19, 2007. REUTERS/Philippe Wojazer

Chad Hurley (L) and Steve Chen, co-founders of YouTube, which was acquired by Web search leader Google Inc. for $1.65 billion last year, pose after a news conference in Paris June 19, 2007.

Credit: Reuters/Philippe Wojazer

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NEW YORK (Reuters) - YouTube, the world's most popular video sharing site, said on Tuesday it will start sharing advertising cash with users who upload the most popular clips of everything from skateboarding dogs to dancing babies.

The video site, which is owned by Web search giant Google Inc, said it will extend its YouTube partnership program to allow individuals to make money when their videos are deemed eligible based on the number of views and how widely they are shared with other users.

YouTube has been criticized by some Google investors, who complain that the site has failed to capitalize financially on its immense popularity.

Until now, users who regularly produced videos could earn revenue from YouTube if they formally applied to be members of the partnership program, which YouTube said has earned some video producers "thousands of dollars."

Under the new system, if a video becomes popular YouTube will email the maker an "enable revenue sharing" message. Executives declined to quantify how popular a video would need to be for its owner receive the email. YouTube said it will sell ads against the clip only if the user agrees to do so.

One recent example of a clip that became a global phenomenon was the JK wedding dance video, which showed a Minnesota couple's wedding party performing an entrance dance routine. It was seen more than 10 million times in less than a week and picked up by various TV news outlets. But according to YouTube executives, the makers never made any money from the clip.

The extension of the program, to be available only in the United States initially, is the latest step by YouTube to improve its ability to make money from the thousands of videos that are uploaded to the site every day.

"We think there's tens of thousands more partners that we can generate through this content," said Tom Pickett, director online sales at YouTube.

Goldman Sachs estimates that YouTube will post revenue this year of about $300 million, and that the figure will increase by at least 40 percent in 2010. Analysts at Credit Suisse, however, have estimated that YouTube could lose nearly $500 million this year.

As part of its drive to increase revenue, YouTube has sought to increase the number of videos from traditional television and movie companies, encouraging more big-brand marketers to buy more advertising time. Earlier this month it signed a deal with Time Warner Inc for clips of shows from CNN, TNT, Cartoon Network and Warner Bros.

(Reporting by Yinka Adegoke, editing by Gerald E. McCormick and Matthew Lewis)

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