Back in mid July, an analyst with Piper Jaffary, Gene Munster, put out a report detailing YouTube’s finances. In the report, he suggests something that will have many YouTubers going out to buy pitchforks. He believes that Google should charge a “nominal fee” to people to upload videos onto YouTube if the video isn’t appropriate for advertising.

Munster’s thesis is that Google needs to weight in the choices that they have to profit from YouTube. He currently estimates that the site will earn $323 million of advertising this year, mainly from big brand names such as Universal, Disney, and Verizon.

However, Munster still believes that the cost of storage and streaming will be more than YouTube’s revenue. A main reason for this he believes is all the videos uploaded such as family moments and South Park clips are losing Youtube money. He states that no advertiser wants to put ads on amateur videos nor can Google legally sell ads on pirated content unless there is already a pre-written agreement between them and the company. Munster also had this to say;

We believe YouTube could develop a hybrid model where it charges a portion of users to upload their videos. YouTube could develop technology based on its current Video Identification technology to protect copyrights to determine whether advertising could be sold against the video to be uploaded. If the algorithm deems Google could not monetize the video through advertising, it could require the user to pay a nominal fee to upload the video to the site, which could be based on the average lifetime cost of streaming for a given video.

We believe that if Google ever intends for YouTube to contribute significantly to its bottom line, the company needs to consider additional methods to charge its users, not just advertisers.

Now while he does have excellent points there are a few flaws in his equation. As it has already been pointed out in our recent article, YouTube soon to be profitable, Google bought up ton of black fiber for pennies on dollar which is being used to help stream YouTube. That alone cuts much of the costs to operate YouTube. Also, he speaks with the belief that today’s current advertising rates will stay the same in the future. This is far from the truth for not only YouTube, but for nearly every website and blog.

The internet is starting to take over other medias such as magazines, televisions, and radio stations. As this happens the value of advertising on the internet will dramatically increase over the years. YouTube will of course be the first ones to feel these effects. Munster further believes that if YouTube was to charge users then these problems would become that of another company’s. I highly doubt this, because of the vast amount of competition for free viral video uploads. YouTube’s traffic would split up between these websites.

Luckily for us, and for YouTube themselves, there’s no signs of currently considering such an idea. If they should consider anything it should be with the idea of expanding their brand into other markets. YouTube has all the elements of Hollywood; directors, producers, actors, writers, talent, and gossip. So why not become the next Hollywood, or at least part of them in a sense?

We’ll explore this idea more in a future article. Right now we as YouTubes really have nothing to worry about. As of last week Google stated that YouTube shows signs of turning a profit in the near future. However, the idea of a “nominal fee” is still there for someone at Google to consider.