Should Sony put movies on YouTube?

Last week we heard that Disney was licensing short-form content to YouTube. This week, the news has been that Sony is considering licensing long-form movies to YouTube.

 The CNET article I link to above is one of the better explanations I’ve ever read of the difficult dance between studios and Web portals on what content should be licensed online and how it should be done. But it mostly discusses what’s in it for YouTube. CNET is an Internet-oriented publication so I understand that writers there may not consider – or care – what’s in it for Hollywood.

 But what is in it for Hollywood?

 I already explained why I think Disney’s plan to get on YouTube is a good one – short clips that drive people back to Disney’s sites seem like a perfect fit for both companies.

 But how does it help studios to put entire movies on YouTube? How does that drive revenue?

According to CNET’s Greg Sandoval, it’s all about Sony’s Web site, Crackle, which it bought in 2005 for $65 million while Google was buying YouTube for $1.65 billion.

“Here’s where Crackle and YouTube can help each other,” Sandoval writes. “Sony Pictures presumably wants to promote Crackle, so it needs to get in front of a large audience. YouTube needs popular movies and TV shows and that means striking deals with studio and networks willing to post long-form content on the Web. Not all of them are.

Some studio executives have told CNET that they don’t believe full-length movies can make money online. To generate a decent return, a large number of ads must accompany a film. Tests show Internet viewers resent this, according to film-industry sources.

The good news is that at this early stage at least, managers at Sony Pictures’ digital unit appear to believe in long-form Web video.”

Sandoval also writes that YouTube should do whatever it can to make the deal happen. “If you want to become the place for all things video–user-generated as well as films and TV shows–and if you believe your audience is too big for Hollywood to ignore and that eventually advertisers will pay a premium to get in front of that audience, then at this point you jump through hoops to get the best content.”

 The two key phrases there are “audience is too big for Hollywood to ignore” and “eventually advertisers will pay a premium to get in front of that audience.”

 I’ve said it a lot lately, but YouTube currently has more than 40% of online video market share with 5.3 billion views in February. Billion. That’s not a number that anyone – advertisers or Hollywood – can afford to ignore.