People have been speculating about how YouTube would eventually monetize video streams, as opposed to page views. The answer comes in the form of an innovative approach that involves almost transparent animated flash “overlays” that will appear on selected videos. It’s an attempt to balance the competing demands of an unencumbered user experience with the effort to monetize the video streams themselves.
Google conducted research, which supports other empirical data in the market, confirming high rates of abandonment of ads (and accompanying videos) when users are exposed to pre-roll. However, pre-roll has been the “default” strategy among sites seeking to monetize their video traffic. To Google’s credit, they’re taking a careful and thoughtful approach to monetizing YouTube video streams.
The rest of this post is on SEL.
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Related: VideoEgg claims YouTube has ripped them off with this “overlay” format. VideoEgg claims a patent filing, but given that the format is a modified version of something that has been on actual TV for several years, it’s unlikely to garner patent protection under the new standard.
And many at YouTube, who’ve been used to no ads in their videos, apparently don’t like the ad format . . .
Screenwerk 
August 29, 2007 at 11:45 pm
[…] commercials don’t follow as easily. As Google reported in their slides supporting the recent YouTube “overlay” release, users largely don’t like pre-roll video ads. What that means is that conventional TV […]
May 24, 2011 at 2:10 pm
[…] commercials don’t follow as easily. As Google confirmed in its slides supporting the recent YouTube “overlay” release, users largely don’t like pre-roll video ads. What that means is that conventional TV […]