Today I read an article in New Media Age wherein Danielle Long suggested that maybe Google has finally found a way to boost revenues from YouTube.

Having struck major content deals with the likes of MGM, Lions Gate Entertainment and CBS, YouTube will offer thousands of TV shows and full-length films for US users. These shows and films will be shown with ad breaks – effectively allowing TV ads to be shown to viewers watching online.

In addition to receiving revenue from advertisers, Google CEO Eric Schmidt has also indicated that in the future YouTube may utilise a subscription model saying: “We do expect, over time, to see micro payments and other forms of subscription to come.”

Monetisation is without a doubt the holy grail of those who own and run social networking sites – but the trouble is, it tends to sit somewhat uneasily with the users of these sites.

YouTube was founded by Chad Hurley, Steve Chen and Jawed Karim in 2005. The site quickly grew and by July 2006 the site was receiving 100 million views per day. YouTube was acquired by Google in November 2006 for the princely sum of US$1.65 billion in Google stock.

Clearly Google saw revenue opportunities in YouTube, but as yet these have failed to come to fruition. Google does not provide figures for YouTube’s running costs, and YouTube’s revenues in 2007 were noted as ‘not material’ in a regulatory filing. Not surprising when you consider that YoutTube’s bandwidth costs alone were estimated at US$1 million per day in 2008.

The end game is – social networking costs the owners of the sites a great deal of money. However, the owners of these sites feel strongly that with such a large user base, the opportunities to monetise these sites via advertising should be great.

But in reality, it doesn’t seem to work like that. The advertising funded business model struggles as users complain about the ads interrupting their experience, and advertisers have complained that social networking users are not responsive.

As such, perhaps the subscription model which YouTube are considering could be the way forward – particularly if they offer advert-free subscriptions. As Danielle Long points out – the move by Google to introduce subscriptions to YouTube could be the tipping point for subscription models across other sites – which rather puts paid to the ideal of online content, and perhaps indeed social networking being free.

Image credit Tracy O