There's been a lot of discussion about how sites like YouTube are going to monetize online video, and with the high costs of hosting and distributing the content, it is seen as a pressing issue. A lot of the talk centers on advertising, though it's unclear how best to work it in. The simplest approach would be pre-roll advertising, a short ad that plays at the beginning of each clip. This would be lucrative, except for the fact that it annoys people. It may work for sites like MTV, Yahoo, and MSN, which basically seek to replicate the experience of watching TV on your computer screen, but there's a reason that YouTube and Google video are hesitant to adopt it. Remember those failed schemes that offered a free phone call if you listened to a short ad beforehand? In a way, that's the problem with inserting ads into social video. YouTube has become something of a communications platform, a tool for people to embed content on their own site, or to share things with others. People don't like their personal expression or communication to be invaded by ads. If YouTube started inserting pre-roll into its clips, it's likely that users would migrate over to Google Video, or one of many other online video sites; and since YouTube's only valuable asset is its user base, it can't afford to see that happen. YouTube has to keep pursuing unobtrusive strategies such as Fred Wilson's suggestion of selling off the post-video recommendation links and continuing to sign deals with major content owners, that use the site as a promotional tool.
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