1. Will ad buyers only buy ad inventory paired with ‘professional,’ sanitized, certified content? And, if so, why? Their audiences seem to have no trouble with the messy rest of the web.
2. Is YouTube redesigning its website and segmenting user-generated content from what they call ‘claimed copyright content’ to avoid losing the ‘safe harbor’ designation under the DMCA?

Now TechCrunch reports that YouTube Quietly Rolls Out AdSense For Video To Claimed Copyrighted Content. So it seems our second question is being answered.

Now what about that first one?

In all the recent chitty chat about buildling businesses for online advertising (mostly around YouTube) I don’t understand a recurring rhetorical glissage that keeps appearing:

“But the problem with video ads may not be the ad unit itself but but the underlying content. Brand advertisers don’t want their names associated with random words spoken in videos. You simply cannot efficiently and consistently target ads based on three words in a video.”

— TechCrunch Google AdSense Says Goodbye to Video Units Feature

The new (YouTube) design will offer four tabs: Movies, Music, Shows, and Videos. The first three tabs will display premium shows, clips, and movies from Google’s network and studio partners, all of which will be monetized with in-stream advertising. Meanwhile the Videos channel will house amateur and semi-pro content of the sort major brand advertisers have shied away from.

“They’re putting up walls between all the UGC stuff, which will live within the video channel,…and the brand safe content,” said one senior agency exec who was briefed on YouTube’s plans.

— Clickz YouTube Plans Redesign to Highlight Premium Content

“As we know, the vast majority of views on YouTube are of content that cannot be well monetized (user-generated, non partner content). Really only a small fraction of total views (but most of its revenue) comes from ads surrounding the Partners.”

— Kevin Nalts (WVFF) Will YouTube Segregate Professional from Amateur Content?

So what gives?

Will advertisers only buy inventory paired with what they see as professional, certified, sanitized content? And why?

If their customers are looking elsewhere for entertainment, and finding that entertainment compelling, then why don’t they want to be part of that interaction?

I really do want to know.

YouTube and DMCA Safe Harbor

But wait just a second. Maybe a bigger problem exists for selling ads on user-uploaded content. Maybe YouTube is redesigning to avoid another costly lawsuit like the current one led by VIACOM, while still expanding their ad business.

Here’s the quick and dirty version of this theory.

YouTube, and every other site that hosts content from users, uses an element of the Digital Millenium Copyright Act (DMCA) called the Online Copyright Infringement Liability Limitation Act (OCILLA)

“that creates a conditional safe harbor for online service providers (OSPs, including Internet service providers) and other Internet intermediaries by shielding them from liability for the infringing acts of others. OCILLA was passed as a part of the 1998 Digital Millennium Copyright Act (DMCA) and is sometimes referred to as the “Safe Harbor” provision or as “DMCA 512″ because it added Section 512 to Title 17 of the United States Code. By exempting Internet intermediaries from copyright infringement liability provided they follow certain rules, OCILLA attempts to strike a balance between the competing interests of copyright owners and digital users.”

Essentially, the Safe Harbor provisions make it possible for YouTube to operate without having to audit (my word) all the content that gets uploaded, because they can claim they have no knowledge of the content uploaded.

Instead of auditing the content they just have to have the right processes in place for copyright holders to notify them of infringements. This is widely referred to as notice and takedown.

So a comment from ‘neverest’ on a business insider article called Google Redesigns YouTube, Copies Hulu caught my attention:

YouTube’s problem in selling ads isn’t that you can’t sell against random end-user clips (though it isn’t ideal). The issue is monetizing potentially infringing material, which would put Google outside DMCA safe harbor protections. This is an industry issue, not just a YouTube issue.

Interesting, no?

Considering YouTube’s need to remain behind the protection of Safe Harbor, it casts the redesign into a new light.

New context? Yes. But it doesn’t answer the original questions: will advertisers buy ads on the content their customers find engaging, now matter what its source? Or will they just buy against the content they know?

Maybe Nalts has something more to contribute at this point:

Uncle Nalts has an answer…The Digital-Marketing Mix is still driven by legacy media-advertising buyers who are cozy with CPM advertising. They know what they should spend, and how much it changes awareness (and maybe intent or purchase). They’re not yet familiar with the unique promotional properties of this online-video medium. The lower the CPM the better the deal. The lower the CPM the better the deal. The lower the CPM the better the deal.

George S., who runs the YouTube Partner program, adds below (see comments): “These decisions are typically made at the agency level, not by YouTube, and they will evolve as social media matures.” He’s right- YouTube can influence how advertisers leverage the medium, but ultimately require agencies to recognize the synergy with media and entertaining videos.

So that’s not very interesting.

“Finally, we’ll reveal the secret behind Hulu,” the teaser continues. Finally!

Here’s a guess: the secret will be not so interesting and late coming to market.

Such a spoiler I am.