YouTube bows to reality with plan to interrupt clips with adverts

Set up by friends as a way to share wedding videos, YouTube has rapidly expanded into a global phenomenon which allows people to watch everything from home videos to classic comedy clips online with no charge.

But yesterday the shadow of commercialism fell upon the free-spirited creativity of the Google-owned website when it announced that it is to start showing ads during video clips.

Revenues from advertising could justify the $1.65bn (£830m) that Google paid for YouTube in November 2006. Founded in 2005 by Chad Hurley and Steve Chen, YouTube is the world's most popular video-sharing website.

YouTube was quick to defend the decision, insisting that it had taken every precaution to ensure that commercials dis not detract from people's experience of the site.

The ads, which are 80 per cent transparent, will appear at the bottom of the screen 15 seconds into a clip. If the user wants to remove the ad, they can do so, and after 10 seconds it will disappear automatically.

They can also choose to view the ad by clicking on it, and the video they are watching will pause while the ad plays. Other methods of advertising were discarded after research showed they were unpopular. These included showing a brief commercial before the video clip started. The longer the ad lasted, the more people abandoned the site.

In contrast, a Google spokesman insisted that the chosen format of "overlay" advertising had been well received, with less than 10 per cent of users opting to close the ad. Between five and 10 times the usual number actively chose to watch the ad - although this may have been because the commercials used in trials included a trailer for The Simpsons movie.

The spokesman insisted that fears that people's enjoyment of YouTube would be damaged by the ads were misplaced.

"We've tried a number of different advertising methods on YouTube over the past few months and the new format that we are launching is something that our tests show does not detract from the user experience," he said.

The service has been tested by a total of 20 advertisers on 200 videos, including a Warner Music Group commercial, which allowed users to browse through the company's latest CD collection, running on one of its own music videos and an ad for NewLine hairspray running on a video from Ford Models. Advertisers will pay $20 for each 1,000 views of their ads.

The spokesman denied that YouTube could face similar embarrassment to that suffered by social networking site Facebook, from which six firms recently withdrew advertising after their ads appeared on a British National Party page, insisting that YouTube does not carry a lot of "questionable" content.

At present, YouTube is only introducing advertising in the US with a select number of its commercial partners. But it plans to introduce advertising in the UK and elsewhere in the near future.

YouTube's 1,000 "partners", who will be able to benefit from the advertising, include the BBC's commercial arm and Chelsea Football Club. But as part of its philosophy, YouTube rewards members whose video clips become huge online hits by making them partners - and they too will be able to benefit from a slice of the advertising revenue if they choose. The commercials can be targeted to reach a specific geographical audience at a particular time. For example, a San Francisco pizza company has chosen to place ads on comedy clips shown on YouTube in the San Francisco area between 6pm and 8pm.