I saw this new “Annotations” feature Google has added on Youtube. It let’s the video producers put in speech bubbles, description titles, credits and stuff like that. It seems to be using Flash7 or Flash9 for it somehow. Not yet for embedded and full screen modes. This to me is a clue as to how the overlay advertising is going to look like, basically some text fields overlayed on the video.

I don’t think these overlay ads should be used on all Youtube videos, cause that would irritate users too much. It should rather be limited to the videos by the producers that activate the Video Overlay adsense for all or part of their uploaded videos. With all kinds of filters and an encouragement to video publishers to better describe the videos, better title them, use better tags and categorize them correctly, since that will improve not only searchabillity but relevancy of the overlay ads when they are activated.

If you don’t like watching and closing those overlay ads, Google should sell you ads-free time on Youtube, it could be something like 1 dollar for each 5 hours of ads-free streaming of adsense activated Youtube content (most Youtube content will probably not have the overlay ads feature activated just as most websites on the Internet don’t use Google Adsense). This Youtube credit, Youtube users should also be able to donate any amount they want to their favorite Youtube content providers.

The day Google activates bottom 10% overlay ads, I expect that there will quickly be a billion views per month of Youtube videos with those overlay ads, and that will generate 15 million dollars per month to tens of thousands of Youtube content providers.

Basically the day Google activates intelligent and automatic overlay ads, there will immediately be a whole new industry of 10 thousand profetionnal Youtube content producers worldwide which will be able to make a living at least make some significant part-time income providing always better and better quality content on Youtube. I expect that the quality of Youtube content will thus incease, thus attracting more viewers, to the point that within a few months there could be 10 billion views of Youtube videos with overlay ads per month, that will be a total revenue of 150 million dollars per month for all the independent Youtube content providers. That will make a yearly profit for Google in the billions of dollars just from Youtube, which will eventually be Google’s biggest source of revenue.