Over in the mainstream world, YouTube will only generate about $200 million in revenue this year. That may sound like a lot, but for YouTube's owners, Google, it's a gigantic underperformance.
The specter of Viacom's $1 billion copyright infringement suit against the Internet giant underscores a Catch-22 that has prevented YouTube from turning all of its traffic into profit.
To date, YouTube has only run banner advertisements with videos that have been posted or directly approved by a media company, or about 4 percent of its total video library. The company has refrained from selling ads on the other 96 percent of its videos for fear of looking like it's making money from whatever copyrighted content might be lurking there.
Viacom, which owns Paramount and MTV, recently sued YouTube for copyright infringement. Online guru Brandon "Fight The Patent" told XBIZ that the case might have a chilling effect on other video-sharing sites, but that doesn't seem to be the case in the adult industry.
The main ways to make money off of a video-sharing site like YouTube are to sell banner ads or run advertisements when the videos themselves play. Video ads can either run before or after the video and are commonly called "preroll" and "postroll" ads.
Despite numerous complaints about copyrighted content on adult video-sharing websites, most continue to run banner and video ads with their videos.
• XTube runs banner ads and a still advertisement after its videos.
• RedTube runs banner ads but no video ads.
• Megarotic runs still ads before and after its videos, as well as overlay ads that appear over playing videos.
• PornoTube runs still advertisements, and a brief survey of its content showed that many preview clips from production company include links to the full video on a paysite of some kind. The links appear as overlay ads.
But despite all those advertisements, are these sites making any money, and if so, at what expense?
XTube's Kurtis Potec told XBIZ that video-sharing sites in the adult industry share some of the same difficulty as the mainstream world in making money from the traffic that watches videos.
"There's no real way to monetize it," said Potec, who is the company's director of operations. "It's hard, because the traffic is so sporadic. Not many people go for the ads."
Despite that, XTube does make money, and Potec said that a video-sharing site can make in the "multi-millions" if it's run well. He said that XTube makes its money from a combination of video-on-demand, webcams, ad sales, as well as other smaller offers on the site.
As for copyrighted content, Potec said that he and his staff don't monitor submissions, though they do listen to reports from about 300 helpful users who tell them about copyrighted content they find on the site.
To date, PornoTube is the only site to draw the legal fire of an adult production company. Last December, Vivid sued PornoTube's parent company, AEBN, for copyright infringement.
On top of that, the complaints about adult video-sharing sites continue. Adult director Eli Cross told XBIZ that the industry is moving into an era where everyone expects content to be free. All Media Play President Jeff Mullen agreed.
"We really need to take [content theft] seriously," Mullen told XBIZ. "Everyone thinks 2257 is the biggest problem, but we need to stop the outright theft that's going on."
Viacom's case against Google took another turn today as the two companies agreed on a deal to move the case forward. The case had stalled when Viacom won access to virtually all of YouTube's user information, only to be stonewalled when YouTube asked for a way to hand over the information while preserving user privacy. The two sides reached an agreement that will protect user privacy.
