While Google has admitted that YouTube has never turned a profit, they never stated any specific numbers.  So analysts from Credit Suisse went about looking over YouTube’s balance sheet.

And what did they find?

YouTube is poised to earn $240 million in 2009…a respectable 20% increase over the prior year.  That’s the good news.  Now here comes the bad.

It’s projected that Google will spend $710 million running YouTube in 2009.  The math is simple.  That’s a loss of $470 million in a single year.  Kind of like having a $710 mortgage, but making only $240.  And roughly half of those expenses ($355 million) are for bandwidth alone.

YouTube became popular because of user-generated content.  And it’s that very content that is killing them (as well as about every other video sharing site on the Internet).  Advertisers won’t touch user-generated content.  In fact, only about 3% of the videos on YouTube earn advertising revenue.

The analysts from Credit Suisse concluded that YouTube needs to include more paid content to remain financially viable.  And Google is not blind to this fact.  They recently announced deals with Disney and ESPN for dedicated content channels.

The hope is that this infusion of cash will keep the hosting of user-generated videos do-able (you know, the 97% of videos on YouTube that do nothing but lose money).

But will it or won’t it keep user-generated videos afloat? That’s impossible to predict.  What is known, is that for everything Google has their hands in…nearly every penny they make still comes from only one source; Adwords.  That’s not necessarily a great track record for diversity.

So if you’re a business owner or Internet marketer who believes (or has been led to believe) that YouTube is the holy grail for traffic and profits, the question is this; what will you do if YouTube (and others like it) fail?

In my experience (and opinion) psychology gets broken down into two categories; clinical psychology and street psychology.

Clinical psychology is the health services field. It deals with how to fix what’s wrong in our heads. Street psychology is the marketing field. It deals with getting people to do what you want them to.

Cold reading is a perfect example of street psychology. If you’re not familiar with cold reading, it’s the centuries-old practice that “psychics” have used to extract money from people’s wallets. Ian Rowland is considered one of the master’s of cold reading (i.e he teaches you how it works and how to do it). If you want to find out more, you can get his book here (note: his web site was experiencing technical difficulties at the time of this post).

But more visual (and entertaining) examples of street psychology have come from Professor Richard Wiseman of the University of Hertfordshire in the UK.  He has performed numerous mass experiments that show not only how our brains react, universally, but how our brains can trick us into taking actions or forming beliefs…correct or not.

Here’s a perfect example of how video can do this.  Take a look at the video Richard Wiseman did below.  You’ll immediately think you know the “secret” to his trick.  Trust me, you’ll be wrong:

If you’d like to see more of his videos, visit his YouTube channel.

But he goes even further with what he calls Quirkology.  What is it?  It’s his study of how big truths are discovered in small things.  Or how the behaviors of humans can be predicted.   To see this in action, take some of his online quizzes here.

The point with all these examples and resources is that when it comes to marketing…yes, even marketing with video…it’s good to have training in street psychology.  No, not so you can rip people off like a “psychic”…but so you can understand “how the herd moves”…how people will react (universially) when presented with specific information.

Now here’s a bonus quiz.  You’re familiar with Roman Numerals, right?  Well, take a look at the image below.  Now imagine taking a pen, and while drawing a single, continuous line…and without ever removing the tip of your pen from the paper…turn this into a 6.  Almost no one can figure this out:

Stumped? Click on the image to see the solution.

What is it?

Well, it’s a lot like Adwords for video.  Here’s how it works:

You produce a video that promotes your product or service.  You go to YouTube Sponsored Videos and bid on keywords.  When someone on YouTube does a search based on those keywords, a thumbnail link to your video will appear in the right sidebar of the page, under a section labeled “Sponsored Videos”.  If they click on your video thumbnail, you get charged.

I told you…it’s a lot like Adwords.

But here’s the big difference in terms of marketing.  When someone clicks-through to your video, they still have to watch your video and be compelled by it enough to actually go to your web site.  In other words, if someone clicks-through, watches your video (or part of it) and then goes away…well, you’ve gained nothing.

So producing compelling videos that get people to take action will be critical for anyone using YouTube Sponsored Videos (as a shameless side note, this is exactly what I teach people how to do in my The Secrets of Creating Web Videos That Sell course).

However, unlike Adwords, with YouTube Sponsored Videos you don’t have to worry about quality scores and landing pages (yet).  YouTube Sponsored Videos is so new that it’s wide-open for everyone.  If you remember Adwords back in 2003, well, it’s kind of like that.  That’s another way of saying that this new service is a potential goldmine for fast-acting and savvy Internet marketers.

To see how sponsored videos work, just go out to YouTube and type in a very competitive keyword…say “diet”.  You’ll see sponsored videos appear in the right sidebar of the results.

To learn more…and even sign-up for YouTube Sponsored Videos…just click here.

A few month’s back, I ordered Seth’s newest book, called Tribes.  Actually, I pre-ordered it because it hadn’t been published yet.  About two days ago, I received the book in the mail.  Only it didn’t come from Amazon (where I had ordered it)…it came from Seth.

There was a note inside the cover of the book that said this:

Here’s a gift.

No strings attached.

I want to thank you for believing in the Triiibe, for signing up sight unseen, for buying a book you hadn’t read yet, hadn’t heard about yet, hadn’t browsed yet.

You went first, took the lead, took a (small) chance with your money and a big chance with your time.

Thanks.

Here’s an advanced copy of Tribes.  An early copy, for you, before anyone else gets one.  Please read it and keep it.  And when the one you paid for comes, I hope you’ll give that one away.  In two weeks or so, when it arrives from the bookseller, take that second copy and spread the word.  If all you do is file it away, I’ve failed.

I write books so people will spread the ideas inside.  I write them to change things, to give a name to something that might be invisible and to give you a tool to make the change you hope to see in the world.

Working with you (and the rest of the Triiibe) is the entire purpose of my career.  I hope you’ll put this gift to good work and give it to someone who needs it.

Thanks again,

Seth

Now through the years, I’ve occasionally received unexpected gifts or books from people I purchased products from.  But never have I received something like this.

And what Seth is doing happens to be extremely intelligent.  You see, he’s slyly doubling his audience (or at least attempting to), without running an ad, without asking for someone’s name or address and without doing anything that seems “marketing related” (he also happens to be invoking a few powerful psychological triggers to ensure his audience will grow because of this).

It’s borderline marketing genius.

And just to prove how well it works…how effective it can be in growing an audience of people who otherwise may have never heard of a person or product, here’s my offer to you.

If you’ve never heard of Seth Godin before…or have never read his books…send me an email with your physical mailing address (my contact info is here)…and I’ll send you my extra copy of Seth’s book (just like he asked).

In the event I get more than one request, I’ll put everyone’s name in a hat and pick one.  Fair enough?

Now you want people to buy your video…either on DVD or through electronic download.  There are lots of ways to do both (and lots of options with both)…so much so, that people become completely confused, overwhelmed and intimidated by it all.

Enter a service called CreateSpace.

With CreateSpace, you can make your videos available as full-length pro-quality DVD’s (on Amazon or really anywhere else) or as video downloads through Amazon UnBox.

Here’s how it works.

Basically, you send CreateSpace your video on DVD…and they do the rest.  Simple huh?  They create your full-color DVD’s on demand, take care of UPC codes, handle all fulfillment and more.  The cost for this is deducted from the sales price of your video.

There are no setup-fees, no minimum orders and you retain all rights to your videos.  The bottom line…if you ‘re looking for a fast and easy way to make your videos available to the masses, CreateSpace is definitely a service you’ll want to check out.

You can learn more at their web site by clicking here.

On the other end of the spectrum, we have Internet marketers who will claim insane levels of success by using video in place text. Problem is, they never quote any specific numbers or give any clues as to what the “before video” and “after video” pictures look like.

So I’ve decided to share the actual statistics (from Google Analytics) between a video site and a text only site. Now, please understand I won’t be sharing any financial statistics (sorry)…just statistics regarding general visitor behavior.

For the video site (I label it video in the stats), I’ve chosen my homepage (webvideouniversity.com). Now, my homepage isn’t 100% video based…it’s a mix of video and text…however, it does contain a dozen videos.

For the text site (I label it text in the stats), I’ve chosen a site from one of my partners. It’s a site that is 100% straight text. And while it’s not in the same exact market as my site…it is of similar design and gets the same amount of traffic. So the comparisons, while not perfect, are pretty good.

Alright…now onto the stats:

Bounce Rate (people who go to the homepage and leave without taking any other action):

Text = 87%
Video = 59%

Average Time On Site:

Text = 42 seconds
Video = 5 minutes and 50 seconds

Browser Used:

Text = 76% Internet Explorer, 20% Firefox, 4% Safari
Video = 43% Internet Explorer, 53% Firefox, 4% Safari

Operating System:

Text = 92% Windows, 5% Mac, 3% Other (Linux, iPhone, etc.)
Video = 79% Windows, 20% Mac, 1% Other (Linux, iPhone, etc.)

Internet Connection Speed:

Text = 70% DSL or above, 24% Unknown, 6% dial-up
Video = 78% DSL or above, 21% Unknown, 1% dial-up

Now, I know a lot of people will want to know “what’s the conversion rates” between the text and video sites…and again…like I said, I won’t be sharing any financial information here. But I’ll give you a hint. Look at the Bounce Rate and Average Time On Site statistics. They should give you a pretty good clue at which site converts better.

For the Browser Used and Operating System statistics, I’ve included those because they illustrate a trend that has been proven in other web video statistics…that people who watch online videos are actually more educated than those who don’t.

That means they don’t use whatever browser that comes pre-installed with their computer (they understand they have a choice…and usually a better choice…as evidenced by the large jump in Firefox users on the video site). And they do their homework when it comes to PC vs. Mac these days…as evidenced by the jump of Mac users on the video site.

I’ve included the Internet Connection Speed stats to illustrate a point I’ve long been making…the percentage of dial-up users online is so small that there is no reason to dumb-down the quality of your videos to accommodate them. They can wait…or they can upgrade to technology that became available 10 years ago. In any event, they probably don’t have the money to buy your product anyway.

So those are the stats and a few of my comments. What are your thoughts?

You could start a web site or get listed on Amazon or do the eBay thing.  But what if instead, you could produce a video for your product.  And this video would be seen by people looking to buy products like yours.  And instead of people being swayed by price, their decision to buy from you was based on the quality of your video.  And what if all of this were free?

Enter a new web site called ShopFlick.

ShopFlick is a storefront, like Amazon, but rather than having a billion name-brand products, they feature products created and sold by small business owners.  And it’s all 100% video based.  That means your product isn’t sold with text or pictures, but rather, it’s sold based on the video you create to market your product.

To the shopper, it looks like this.  They go the ShopFlick.  They do a search or browse through categories.  When they find a product they’re looking for, they watch the video a product maker has put together and decide to buy or not from there.

It’s a little like Amazon and eBay combined.  But there’s no bidding.  And listing your product, at least for now, is free (ShopFlick plans to charge a $10-$20 monthly listing fee in the future).  ShopFlick also charges a transaction fee for every item you sell…about 12.5%.  Not great, but not too bad either.

It will be interesting to see how ShopFlick does (they recently received $7 million in funding).  I hope they do well.  It will be a terrific way for small business owners to promote their products.  And…since products are featured using only videos…it will also be a terrific way for video producers to find an endless stream of clients.

In case you missed the link to ShopFlick at the top of this post, here it is again.

In fact, although I only occupy a tiny speck in the world of web video, I routinely have to turn down unsolicited offers to make videos because my schedule just won’t allow it (a situation I’m in the process of trying to rectify).

But the bigger point is that when it comes to web video production (making videos for people), the demand far out paces the supply.

And the money’s not bad either. At the pro-end, the typical fee for producing 60 seconds of web video for a client is $3,000. And at the beginner level, you can expect to earn around $300 for every 60 second video you produce. With a little experience under your belt, you should be able to quickly raise your fees.

So where you can you find clients? If you’re just starting out, all the usual places like elance and guru. Running Google Adwords ads can help you land clients too. If you do good quality work, trust me, the word will spread and you’ll start having people approach you out of the blue.

Also keep in mind that 99% of the time your clients will be in another part of the country or world, so it’s a job you can perform in your own home.

There’s a lot more I can say…but I don’t want this to start sound like some cheesy “business opportunity” ad…so if you’d like me to write more about it, just let me know.