Yahoo! (Nasdaq: YHOO) has updated its online video service, giving users the promised ability to upload their own clips. It's a step in the right direction, but unfortunately, Yahoo! will face tough competition from a variety of similar offerings. A small tweak, though, could help differentiate Yahoo!'s service from the pack -- and perhaps increase the site's advertising potential.
The new Yahoo! Video includes video clips uploaded by users, snagged from other sites by Web-crawling programs, or fed to Yahoo! by partners. The revamped site also includes a variety of tools to enrich the viewing experience, including ways to share video via Yahoo! Mail and Messenger. Still, The Associated Press notes that the service closely resembles features from the popular video site YouTube.com. In addition, Google (Nasdaq: GOOG) Video also has some of the same capabilities, and TimeWarner's (NYSE: TWX) AOL is testing out its own service to let users upload video.
With all of these parallel offerings, Yahoo! Video's current incarnation likely won't establish a commanding lead. But providing users with a monetary incentive to produce original, innovative content could make all the difference.
Google's come close to this idea already. When it first launched Google Video, it indicated that it would allow content providers large or small to charge for their video uploads. To date, though, this feature has not materialized. Yahoo! could latch onto this concept without changing its current setup, simply by running contests that reward original content providers whose videos attract the most traffic over a specified period with modest cash prizes.
Allowing aspiring filmmakers to share content via the Web is a powerful idea. Unfortunately, without the prospect of some monetary reward, most of the contributions probably won't be that original or that interesting. As a result, traffic, and by extension, advertising revenue, will likely remain limited. Tempting users with the potential for cash prizes could make Yahoo! Video more of a destination, and add to the company's coffers in the process.
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Fool contributor Brian Gorman is a freelance writer in Chicago. He does not own shares of any companies mentioned in this article.
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