By the time everyone realized that video needed to become a core content offering, YouTube’s penetration and brand presence was insurmountably large. Their embed player, ugly as it was (and is), was (and remains) ubiquitous.

Had YouTube rolled out a commercial video platform with
rich on-demand encoding services, a fully customizable embed player, HD or at least higher quality playback all sitting on a developer friendly App Engine-type infrastructure, they would have obviated the need for at least half a dozen related services from On2, Brightcove, thePlatform, Limelight and Akamai. They could have created the Amazon AWS equivalent in video overnight.

It costs real money to serve video, and it ain’t easy, particularly when it’s done well. Video consumes orders of magnitude more bandwidth than other content types. As such, it presents a significant infrastructure business opportunity. However, most good companies opt to ‘monetize’ simply by marking up their costs, rather than playing shell games with loss-leaders and hoping to make up the difference with advertising.

No amount of advertising can feasibly subsidize the cost of serving video both on-site and off-site, particularly at healthy operating margin levels.

As an Internet marketing consultant who runs ad campaigns for couple dozen clients, I have filled out YouTube’s advertising information request form multiple times and have never received a response. A colleague in NYC has had the same experience.

If Google is going to monetize their $1.6 billion investment in YouTube, following up on sales leads would be a good idea, don’t you think?