YouTube Goes Local in Hearst-Argyle Deal

NEW YORK Nearly eight months after Google purchased YouTube for $1.65 billion, the video-sharing site is starting to show signs of developing a sustainable ad model.

In its latest move, YouTube has struck a deal to create channels for five local broadcast stations owned by Hearst-Argyle. The companies will share ad revenue generated by news and other content.

The effort comes as YouTube experiments with new ad formats. In a few tests, the company has begun inserting text-ad invitations to view long-form content into some clips. This would enable YouTube to offer the type of video advertising much in demand by marketers.

For now, YouTube and Hearst-Argyle will split revenue generated from standard ad unit impressions. The companies did not disclose the revenue split. Both YouTube and Hearst-Argyle will sell ads for the channels.

Hearst-Argyle stations in Boston, Manchester, N.H., Sacramento, Calif., Pittsburgh and Baltimore will participate.

YouTube’s head of premium content partnerships, Jordan Hoffner, said more of Hearst-Argyle’s 26 stations could join the program down the line.

“We know everything starts locally,” Hoffner said. “Here is an opportunity to engage these content owners who produce a lot of content and enable them to utilize us as a distribution platform.”

After little initial progress, YouTube has begun to make headway in securing professional content for use on the site, which its executives see as a platform for both amateur and professional video creators to find audiences.

Last week, it finalized a deal with EMI to post the music videos of that company’s artists.

It has also struck ad-revenue partnerships with a clutch of popular amateur YouTube creators. The company is also readying a content-identification system that it claims will make it easier for content companies to screen copyrighted content from the site—and also allow it to target ads.

Hoffner said YouTube would eventually like to include video advertising with professionally produced content, but it has not settled on a method.

“We’re still looking at the optimal point for video ads in terms of placement and length,” he said. “We want to see what the community of YouTube is going to embrace so it’s something that’s scalable.”