One of these days, Google is going to need to find a way to wring money out of YouTube, but at least it has a lot of room to grow.
If you're a glass half-full kind of person, then a report out Friday from Bernstein Research's Jeffrey Lindsay (as spotted by MediaMemo) should resonate. One of YouTube's main revenue-generating issues is that companies don't necessarily want to advertise next to videos of a fireman lighting himself on fire, or TMZ's bizarre interview of the Houston Rockets' Ron Artest, both among the most popular videos on YouTube at the moment.
But Lindsay believes that YouTube has been able to increase the number of videos suitable for advertising to around 9 percent of YouTube's inventory. That doesn't sound like much, but it's up from around 3 percent last year, according to MediaMemo, and could reach 15 percent next year.
The concern, of course, is that despite YouTube's enormous traffic--it's the single-largest part of Google's outbound bandwidth--upstart Hulu could have an edge with advertisers because of the quality of its content. That's part of the reason YouTube is involved in Vevo, a joint venture with Universal Music Group to create a standalone site for music videos.