Update: Analysts have been on Google's back for over a year about how the search engine would make money from its YouTube video-sharing site.
Video ads were the obvious direction for Google, but while the company hones its video ad-serving methods, YouTube Oct. 8 launched an e-commerce platform to sell music and games from Apple's iTunes store and Amazon.com. Talk about misdirection. Google just bent us like Beckham. But don't call YouTube YouBay or Youmazon just yet.
In the first iteration of the platform, YouTube is selling music downloads and games through deals with the iTunes store and Amazon.com. These will appear as "click-to-buy," or retail links on the watch page beneath the video.
YouTube users watching music videos will be able to click on buttons that link to the corresponding pages on iTunes and Amazon MP3 where they can buy and download music, which totals roughly 15 million songs and comes from EMI Music and other companies. There will also be Amazon.com product links to the video game Spore on videos from Electronic Arts.
YouTube said in a statement that the YouTube eCommerce Platform will be rolled out on a larger scale over the coming months to allow partners from film, TV and publishing to generate revenue from their content beyond the advertising Google sells against their videos, which is hardly a cash cow.
If you consider the YouTube phenomenon in its entirety, enabling users to purchase products related to the content YouTube is airing makes perfect sense. YouTube is about videos first, sure, but the social experience of sharing and commenting on the content is also important. YouTube officials noted in a blog post:
""When you view a YouTube video with a great soundtrack, you often see comments from YouTube users asking about the name of the song and where they can download it. Or when users watch the trailer for an upcoming video game, they want to know when it will be released and where they can buy it.""
This scenario is not unlike being at a brick-and-mortar music store and sampling tracks from a new release. If you like what you hear, you can go to checkout and buy the CD. With YouTube, you don't have to leave your house; just make a few clicks and it's done.
The YouTube eCommerce Platform is only available in the United States but will roll out internationally in the coming months. Partners who use YouTube's Content ID identification and management system can also enable retail links on videos that they choose to leave up on the site.
YouTube said it will also be experimenting with the user interface to see what works best for the YouTube community.
How well this will do is anyone's guess, but I love the potential, particularly among teens and twenty-somethings who are into checking out videos on YouTube and wondering how to get them because they are "cool" or "popular." Just in time for the Christmas season, too.
But I wonder how the credit crunch and broader Wall Street woes will impact e-commerce spending.
Also, Google CEO Eric Schmidt now has a crutch to use any time someone asks him how video ad serving is faring on YouTube, an issue that must pain him despite comments to the contrary.
Now he can flash e-commerce sales from YouTube. Another thing to consider: What will the interplay be between YouTube's e-commerce provisions and ads?
Will YouTube's e-commerce sales buoy Google's ability to sell ads against YouTube videos? My guess is yes. What do you think?