San Francisco — Google Inc.’s YouTube on Wednesday said that it has signed a deal with Time Warner Inc. to show program clips from a range of its properties, including CNN, the Cartoon Network and TNT, in an agreement that allows both the companies to share advertising sales from the online videos.
YouTube needs to make more money. The move is the latest attempt by the Google Inc-owned video-sharing service to enhance the range of video clips through which it can sell advertising as it tries to improve its chances of becoming profitable in the near term. Professional content has a much better chance of bringing in advertising dollars for YouTube.
Time Warner and Google-owned YouTube said the clips from Time Warner properties Warner Bros. Entertainment and Turner Broadcasting System would feature advertising with revenue being split between them.
The agreement disclosed Wednesday does not permits YouTube to show complete episodes of television shows or movies, only excerpts, what a statement from Time Warner and YouTube described as “high-quality, short-form content”.
Currently, most YouTube clips are uploaded by users. But advertisers are unwilling to advertise alongside so-called user generated content, fearing that the clips will either look unprofessional or feature inappropriate subject matter. Hence, Time Warner will begin to create and program individual YouTube pages this year, the New York-based company said today in a statement. Access will be limited to U.S. users, San Bruno, California-based YouTube said today on its Web site.
The clips will extent from CNN news coverage to Cartoon Network and Adult Swim animated shows to TNT dramas to Warner Bros. Television productions like “Gossip Girl” and “The Ellen DeGeneres Show,” they said.
“Our agreement with YouTube helps us expand the amount of our promotional content, animation and news that we already make available online,” Time Warner chairman and chief executive Jeff Bewkes said.
“Working with YouTube, we expect to improve our ability to monetize this short-form content through new and creative advertising initiatives,” he said.
YouTube, which generally shows user-generated videos, is adding clips of TV shows and movies to attract more advertising and draw viewers away from rivals such as Hulu.com, whose owners include General Electric Co’s NBC, News Corp., and Walt Disney Co. The ads will be sold by Warner Bros. Entertainment and Turner Broadcasting System.
“There is a lot of content coming on to the site, a lot of professional content, which is great,” Jordan Hoffner, director of YouTube partnerships, said in an interview. “To really increase our domestic presence here for both content, and monetizable content, is kind of a double-win.”
YouTube has reached similar agreements this year with Disney, CBS Corp., Sony Corp. and Metro-Goldwyn-Mayer Inc.
An expanded deal could see more full-length programming on the website similar to Hulu, a popular video service owned by News Corp, NBC Universal and Walt Disney.
“It is really important to get them on the platform and then it opens up new opportunities,” Hoffner said. “The content that is developed by Time Warner lends itself to short form like the news clips from CNN or the cartoon shorts from Cartoon Network.”
As part of the deal, YouTube will also be integrating the Time Warner player into the site.
Time Warner’s HBO television network already has a channel on YouTube to promote popular shows such as “True Blood” and “Entourage”.
“This partnership with Time Warner will provide our community with some of the most popular video content produced,” said YouTube co-founder and chief executive Chad Hurley. “We hope to build on this deal and look forward to a long and productive relationship.”
“We want YouTube to be a place where you can find any kind of content you are looking for, from short-form user generated clips to full-length independent films and Hollywood movies and shows,” YouTube strategic partner manager Graham Bennett said in a blog post.
“Today, we have taken another step in making YouTube a comprehensive video destination by partnering with Time Warner.”
Google has never formally broken out YouTube’s financial performance, but last month indicated that the site might be performing better than Wall Street and others have speculated.
But with over 20 hours of users’ videos uploaded every minute, analysts point to the huge costs involved in being the world’s top free-to-view Web video service. They estimate YouTube’s losses run between $200 million to $500 million a year.
According to Google execs, YouTube is expected to turn a profit at some point, though they would not say exactly when.
No financial details of the deal with Time Warner were disclosed but both sides will share advertising revenue.