UPDATED 18:19 EST / APRIL 23 2009

Simon Cowell, ITV, and YouTube Can’t Figure Out How to Take Free Money

image When I read the headline today at the UK TimesOnline: “ITV, YouTube and Simon Cowell miss out on Susan Boyle windfall,” my first thought was “Are you freakin’ kidding me?”

In monitoring the buzz of hordes of technological and pop culture opportunists, I’ve personally witnessed the creation, monetization and sale of at least a dozen different sites having to do with Susan Boyle and the instant phenomenon she’s become, making thousands of dollars in the process.

By the generous estimations of the TimesOnline, they figure a gross of $1.83 million could have been had from the continues clicks of play on the various YouTube videos.

Due to the greed and obstinacies of all the parties involved, though, no agreement could be reached.

There are two lessons that can be drawn from this sequence of events:

1) YouTube needs to seriously reconsider what they add to the equation in terms of the distribution and dessemination of online video and change their partnership and ad revenue payments accordingly.

As I discussed last year in a pretty lengthy editorial at Mashable, YouTube has set up a monetization scheme that is combative at best and untenable at worst:

I’ve been mulling over this revelation that AdAge and Silicon Alley Insider dropped on Monday regarding YouTube allowing the users to sell their own advertising.  I keep going back to the leaked PDF and looking it over to see if there’s a hidden incentive built in somewhere.  I keep looking at all the analysis to see if someone’s come up with the silver bullet theory that makes this somehow a good deal for producers.

I keep coming up empty though. The whole idea just doesn’t make sense to me, [… a]fter you’ve produced, acted in, rated, programmed, marketed, distributed AND sold advertisements for your own work, they LET you keep 55% of the money.

Thanks YouTube. Thanks for nothing.

2) Similarly and particularly those who aren’t producing content for online distribution exclusively need to be grateful for any extra revenue generated by these types of viral explosions.

Meanwhile, on the flip side of the equation, Cowell and company aren’t much better either.  It isn’t as if they went to any added expense to create content specifically for the internet.  In fact, they didn’t do anything whatsoever … they didn’t even upload the content themselves.

It was a number of very prescient and avid fans who saw something that they felt would translate to viral video gold – and it did. Any deals struck between YouTube and Cowell / ITV would have been found money for them.

Beyond the problem of UGC, beyond the problem of what forms of copyright are superior, and beyond the problem of distribution and online video’s mainstream status – the greed and ineptitude at negotiating an agreement seems to be the biggest stumbling block for those wishing to profit from online video, at YouTube or elsewhere.

Since you’re here …

Show your support for our mission with our one-click subscription to our YouTube channel (below). The more subscribers we have, the more YouTube will suggest relevant enterprise and emerging technology content to you. Thanks!

Support our mission:    >>>>>>  SUBSCRIBE NOW >>>>>>  to our YouTube channel.

… We’d also like to tell you about our mission and how you can help us fulfill it. SiliconANGLE Media Inc.’s business model is based on the intrinsic value of the content, not advertising. Unlike many online publications, we don’t have a paywall or run banner advertising, because we want to keep our journalism open, without influence or the need to chase traffic.The journalism, reporting and commentary on SiliconANGLE — along with live, unscripted video from our Silicon Valley studio and globe-trotting video teams at theCUBE — take a lot of hard work, time and money. Keeping the quality high requires the support of sponsors who are aligned with our vision of ad-free journalism content.

If you like the reporting, video interviews and other ad-free content here, please take a moment to check out a sample of the video content supported by our sponsors, tweet your support, and keep coming back to SiliconANGLE.