With so many people beginning to expect a lot of things for free, and in YouTube's case, being a part of their business model, there is an inevitable dilemna and crisis that arises. That crisis is that there is only so much money you can burn through before you must begin to make money.
Yet, even that isn't the only crisis. What will happen when a group of users who have been socialized into having commercial, ad free videos, are suddenly being required to view them as a cost of watching those videos? YouTube must answer that question. How can they do it with fickle viewers ready to go to the next video site if they don't like what's happening?
Bambi Francisco of MarketWatch in a recent talk with YouTube CEO and founder Chad Hurley offered that "One obvious way is to place 5-second post-roll advertisements on those 100 million video clips being viewed each day. Yet Hurley doesn't want to do that.
"That's an easy solution," he said to me. "Google's delivered advertising that's helped the consumer experience," he said, adding that before any inserted video ads go up, "they'd have to prove useful to the consumer first."
Francisco later adds that she predicts "that those placements will be auctioned off, like sponsored advertisements are on Google (GOOG)."
YouTube is experiencing what a lot of start-up companies do. They begin with the high ideal of starting off with no ads as some type of higher moral place in their minds, and then financial realities face them and they must learn how to monetize their business if they want to survive.
Now because they got their users used to using stuff for free and without interruptions, they have inflicted themselves with the problem of now abandoning one of their major draws, which was non-commercialized, amateur participation.
The entire question that will have to be answered will be whether their users will stay with them when the advertising begins.
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