Can Big Media Pals Help YouTube Turn a Profit?

So according to an analysis by Credit Suisse, Google will lose about $470 million this year operating YouTube. Clearly, selling ads around user-generated and illegally-posted content isn't really working.

Plan B seems to be trying the strategy that Google's own Google Video site tried a few years back: bring in some professional media partners, offer up longer-form shows, and possibly even experimenting with paid downloads and subscriptions a la iTunes. (There's also pre-roll advertising in front of the new content, which YouTube's founders had sworn they'd never do.)

Those are all worth trying, but YouTube will need a broader selection of content than CBS' "Harper's Island" and the 1980 feature film "The Blue Lagoon." (Though there are a couple good Werner Herzog films available...)

Good News: YouTube Testing Paid Downloads

I think this is very good news: YouTube is now testing paid downloads. If you want to pull down a high-res, MP4 copy of a video from the site (which will play on an iPod), you can pay to do so. No word on what percentage of the revenue goes to the creator. But the one way to pay for videos is Google Checkout, Google's own PayPal-like payment system.

YouTube is currently only testing this with select partners. Wired News notes that the files aren't DRM protected, which will mean that big media companies will likely be leery of the system.

Here's an example of a video that can be downloaded as an MP4 for 99 cents.

You may recall that for a while, Google Video allowed content creators to charge for video downloads -- a service they abandoned in 2007. I ran into someone last week who said that that had been a good source of revenue for them, selling docs and educational films... so perhaps they'll give YouTube's new offering a try.