To Cash in on Content, YouTube Turns to E-commerce

Video Links Will Allow Users to Buy Music, Games From Amazon, iTunes

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NEW YORK (AdAge.com) -- YouTube is diversifying its revenue model. The latest plan to milk cash from the world's most popular video-sharing site? E-commerce.

The website is working with Amazon and iTunes to let users buy and download music, games and other products when they watch a video featuring a particular song or item.
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"Our philosophy is one of choice and offering different ways for advertisers to engage with users," said Shishir Mehrotra, director of product management at YouTube.

Is the move to include e-commerce a sign that advertising isn't working?

"I wouldn't take it that way," he said. "We've seen great usage of in-video ads, and the contests, the home page and video ads have been successful. We're enthusiastic about click to buy, and we have a long line of products we'll be unveiling over the next few months and we have high hopes for them as well."

How it works
When users watch a video of Katy Perry, who is signed by record label EMI, which has partnered with YouTube, they will see a pair of links that takes them to the artist's page on iTunes or Amazon MP3. There, they can download the song or the entire album. Another example is Electronic Arts' new Spore game. Thousands of YouTube videos of the game have been uploaded, and now those videos will offer links through which viewers can buy the game from Amazon.

"From a user perspective, we want them to engage with the content in as many ways as possible," said Bakari Brock, business affairs counsel. "And from a partner perspective, we want them to make money from the videos in as many ways as possible."

One other way the tool can be used? By combining it with YouTube's video-identification product. YouTube can identify when a user has uploaded copyrighted partner content, so in the case of EMI, the label could locate an uploaded video featuring one of Ms. Perry's songs and include links through which viewers can buy the tune.

Aims to expand
YouTube will begin rolling out e-commerce tools with its content partners, starting with entertainment companies. It hopes to eventually roll out e-commerce offerings to a broader group of YouTube partners.

"The fact that they've got so much traffic means they've got a pretty good universe," said Will Richmond, broadband analyst at Video Nuze. "They don't have the get a lot of people converting to buy to make some money."

YouTube has tested e-commerce in its "Screening Room" section, letting users click to buy the short films they have just watched; it has also tested it with music.
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