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YouTube and its challengers may be able to earn subscription revenues, if the findings of a new IBM report are accurate.

The study found that the TiVo generation is officially online, with 11% of respondents happy to pay 'a little' to remove all advertising from videos.

Consider the numbers: Google-owned YouTube pulls in something like 50m unique users a month; let's assume it can charge 'a little', a couple of dollars a month maybe - let's round it up to $24.99 a year for a 'premium user' service. Now let's assume that 11% of users sign up. That's a revenue stream worth $137m annually...

IBM's 'End of advertising' survey was completed by 2,400 consumers and 80 ad execs. The lead findings were neither here nor there: 40% of respondents found online video ads more annoying than any other format. And roughly the same amount found them less annoying.

Similar studies have found that most people aren't too fond of in-stream ads. By contrast, less-intrusive video ad formats like placements and text links weren't so loathed.

All of this is something that the video sites are considering carefully; the balance between user experience and revenue. Most people will tolerate a certain level of advertising in return for free content, provided they are kept short, especially pre-roll ads.

Meanwhile, a recent Advertising.com report found that 63% of consumers preferred shorter ads. A YouGov study backs this up: 93% of UK web users are prepared to view pre-rolls so long as they are no longer than 15 seconds.

There are of course other ad options available, which users may prefer to in-stream ads. Google/YouTube has rolled out an overlay format - it covers 20% of the screen and allows the viewer to choose whether or not to watch the ad in full.

Meanwhile, InSkin Media recently announced a new video ad format that wraps around the video, though it remains to be seen whether or not this will annoy viewers.  

Related stories:
Google launches in-video ads on YouTube

Graham Charlton

Published 12 November, 2007 by Graham Charlton

Graham Charlton is the former Editor-in-Chief at Econsultancy. Follow him on Twitter or connect via Linkedin or Google+

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