Google has begun sharing advertising revenue with the makers of a popular video clip in a groundbreaking deal that could drive up the costs of competing in the fledgling video-sharing sector.
The search company has agreed to turn over most advertising revenue generated by the latest video from Fritz Grobe and Stephen Voltz, creators of "The Diet Coke & Mentos Experiment," according to Peter Chane, a senior product manager for Google Video.
In exchange, Grobe and Voltz, who saw their original offering–which shows a version of Vegas’ Bellagio Fountains made of 101 2-liter bottles of Diet Coke and 523 Mentos–catch fire with video-sharing fans last summer, have agreed to let Google host their latest video, "The Diet Coke & Mentos Experiment II
Until now, most amateur-made material that appears on video-sharing sites was made for fun. But inviting talented videographers to share in the ad revenue generated by their clips is the way of the video-sharing future, analysts say. Metacafe, one of the top 10 video-sharing sites, also announced on Monday that it will pay
$5 to video creators for every 1,000 times their video is watched.
Critics argue that most video-sharing companies are profitless, and their costs, such as the high price of bandwidth, make sharing ad revenue difficult. Yet, video-sharing site Revver.com has shown that rewarding video makers
helps attract the best talent. The Los Angeles-based company, which pays 50 percent of ad revenue to videographers, has drawn some of the Web’s top auteurs, including the producers of Lonelygirl15, a much-watched fictional video series about a home-schooled teenage girl.
Revver is betting that audiences will follow the best video makers. Apparently, the deep-pocketed Google is making the same bet.
"This is the first case where we matched up video content with advertising," Chane said. "We’ve taken user-submitted material that is not considered professional content and monetized it."
How long will it be before YouTube, which sees more than 50,000 videos uploaded to its site daily, begins writing checks to its content creators? Google acquired YouTube, the sector’s largest company, earlier this month
for $1.65 billion.
"Until the deal closes, we’re continuing to operate as two separate companies," a Google representative said in an e-mail.
YouTube could not be reached for comment.
One thing is sure: Stupid pet tricks and people acting goofy on camera have never been as lucrative a business.
Grobe and Voltz
, for instance, pocketed $35,000, their share of the ad revenue paid to them by Revver, for their first Coke-and-Mentos video back in July. Now, the pair could earn big bucks from Google if the latest video is a hit. The two are also hosting a video-making contest sponsored by Coca-Cola, which paid them an undisclosed amount.