Published:
08-Oct-08
Google has added retail links to thousands of YouTube's partner videos. Links to online stores iTunes and Amazon.com are embedded on music videos from companies including EMI Music while videos from Electronic Arts (EA) will include an Amazon.com product link to EA's video game Spore. Apple and Amazon will reportedly share revenue with YouTube when users buy content using this method.
Retail links are being rolled-out across YouTube's music videos and will initially only be available in the US. Google intends to expand this system to build a broad e-commerce platform for videos covering a range of content including music, film and TV. Partners using Google's content identification system to claim user-uploaded content can also enable retail links below these videos.
Our take...
The addition of click-to-buy links on YouTube is Google's latest attempt to generate revenue from its user-generated video platform. Despite the large number of streams, user-generated videos are notoriously difficult to monetise. Screen Digest forecasts that 60bn user-generated online videos will be streamed in the US in 2008 but these streams are set to generate revenues of just $161.9m (€118.1m). In order to grow revenues Google has recently increased the amount of advertising on its partner videos, adding automatic post-roll ads in late September 2008.
By allowing viewers to immediately purchase the song featured in a partner video Google's new retail links are likely to see higher buy rates for low cost transactions such as music tracks . However, click-to-buy may not be as successful for higher value products such as video games as they are less of an impulse purchase.
Although exact details of the revenue sharing arrangement have not been disclosed both Amazon and Apple already operate existing affiliate programs. Retail links are unlikely to be a significant revenue stream for Google in the near term as the proportion of YouTube videos featuring them is small.
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