So, I've been reading Bob Garfield's article in Wired about the uneasy relationship between YouTube and advertising and how the old TV world is falling apart (the mag runs another article on the future of TV in the same issue). He talks about how hard it is to monetize YouTube's content and lists a number of challenges.
"First, there's the basic question of where, exactly, to put the ads. Prior to the acquisition, YouTube refused to sell ads appended to either end of a video – like a TV commercial – on the grounds of safeguarding the viewer experience. This leaves as available ad real estate only the space adjacent to the video window – which is great for whoever is hosting the video. But [...] a significant portion of YouTube videos are embedded elsewhere, mainly on individual MySpace pages."
Well, here's one idea:
Embed a banner into the player -- it should be technologically easy since it's all Flash. To safeguard YouTube's user experience, show the ads only when the videos are embedded into third-party sites (or on YouTube site to unregistered guests). Equip the banner with secondary controls to let the users play the video ad if they are interested. I'm guessing that animated ads here would be too distracting, but static ones should be ok. Perhaps share the revenue with creators and registered users who embed the videos elsewhere and thus increase the number of impressions.
I'd love to hear your thoughts. Comments are open, and so is my email.