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User Generated Content and Media's Myopia

In-Stat reports that when YouTube recently announced the introduction of video ads that can be placed on their homepage, they added a much needed source of revenue for the new company. Warner Bros. has already used this venue to advertise Paris Hilton's new album, and Deep Focus ran a series of ads for the movie "Pulse."

More importantly, however, are the advances being made to offer "paying clients" an opportunity to create branded channels -- with the hope of capturing mindshare of the YouTube audience. MySpace has already offered branded pages, albeit not explicitly "channels," nor are they video centric. In-Stat says this is perhaps the first legitimate bid to support a serviceable business plan.

In fact this could be the start of a relatively significant inflow of actual revenue to YouTube's largely investment-supported coffers. If this strategy is successful we may be getting a glimpse of how YouTube is planning on leveraging its user base. More importantly we may be witnessing the first proactive steps on a path toward profitability.

In-Stat notes that top line growth is always welcome but if the bottom line remains entrenched in a sea of red, the ship will still sink, it just takes longer. Only time will tell if these added steps will support YouTube's monstrous bandwidth and/or help find a buyer, should that be an avenue the company chooses.

One tragedy within the User Generated Content (UGC) space however, is the media's almost myopic attention on the largest UGC sector players. Others have garnered some notoriety but In-Stat observed that "Good Morning America" still only has their YouTube clip of the week. While the larger UGC companies gain national exposure, it also puts them under the microscope.

In other words, YouTube has to be particularly careful with its strategic choices, affording it little room for experimentation, and thusly creating a more restrictive operating environment. Any sign of failure and some may say the "sky is falling" again for YouTube. Meanwhile others within the UGC space are more nimble and some already have actionable strategies that are currently profitable.

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