Not that anyone has asked me, but this morning I was thinking about what it would take to save YouTube.  As we know,  YouTube is bleeding money and the advertising model is not going to cover the enormous bandwidth costs.  So to deviate from my normal posts about emerging marketing opportunities and examples I’ll offer my thoughts:

1. Micro-Payments

• I’m a huge fan of the Micro-Payment model and am keeping a close eye on how it moves from success in Asia to the US market.  I see a place for Micro-payments on Youtube.  For instance, let visitors watch 2 hours a month for free but then charge 10 credits per any video over 2 hours.  Credits can be purchased for $1 per 100 credits (or whatever the math needs to be to make a profit).  Give away 2 hours free — or whatever the number needs to be?  This will keep YouTube as the number one video site since most users are under 2 hours while monetizing the hardcore users.  Why credits?  Because advertisers now can give credits away for free to make their ads more relevant on YouTube — e.g. “Watch My Ad and Get 100 YouTube Credits” (see math below)

1. Premium Semi-Pro Content

• YouTube should foster a community of semi-pro content producers then charge for access to that content.  They should invest in semi-pro episodic cartoons and live action shows, use the Google properties to market those shows, give the first episodes away for free, then charge $0.99 per episode after that.  They should also get a percentage of the future revenue generated on the IP so if the show goes pro they get a piece of the action.  The next Simpsons or The Office should come from YouTube rather than ripping off UK ideas.

1. YouTube Cable Channel

• Work a deal with Viacom to create a YouTube Cable channel that is a 24 hour cable channel with non-stop YouTube clips.  Basically run the clips that show up on : www.viralvideochart.com then sell ads on top of it.  Since these are actual TV ads they will garner TV rates — not the internet rates YouTube now enjoys.  This creates a model where YouTube.com is the feeder to YouTube TV that monetizes the content.  As for the copyright issues — I don’t have a solution for that one.

Those are three ways to monetize YouTube which I am sure Google has already worked through  and figured out why they won’t work.  But I thought I would share my thinking on the issue — it would be a shame if we lose YouTube.

ADDED:  I was thinking I bit more about this an wanted to see how the math would work out.  In March 2009 YouTube had 89MM Uniques and the average time people watch online videos is 190 minutes per month (source: Neilson – that’s for all video not just YouTube but we’ll use that number since YouTube is the majority).  If we give away 120 minutes for free that would leave these 89MM viewers, on average, with 30 minutes to pay for.  If YouTube charges $0.01 per minutes we would have $0.01 x 30 minutes X 89MM = $26.7MM per month.  They are estimated to lose ~$450MM in 2009.  This would give them $320MM of that.  If the consumer behavior stays the same when they have to pay — which we know won’t happen.  But its an option.