Googlefinally figured out how to make money with YouTube, and it’s a way that everyone saw coming: Video commercials. First tests with video ads were reported a while ago, but now it seems to be getting serious.

According to the YouTube Biz Blog, tests are currently running to determinate the best advertising format.

To me it always appeared to be the only way Google could make up for some of the money they’re burning with YouTube – the initial price tag, the tremendous amount of bandwidth and legal issues come to mind. Since non-video ads on YouTube proved to be less than well received by users as well as advertisers, forcing users to actually notice ads by either having a prerolled video ad or some “commercial breaks” within a video seems to logical choice.

Educated guess: YouTube will soon have commercial breaks in their videos. Prerolled ads are easier to skip, and everyone is used to see commercial breaks from TV. However, since in-video ads won’t be seen if the playback gets stopped or the page closed, I would bet that non-video ads aren’t likely to vanish either. That would make a mixture of both formats, a (short) “presented by” and one or more short in-video commercials the best choice for advertisers – and therefore for YouTube.

As always, ads are likely to drive users away, but where to? Most other online video hosts already have commercials, and if “Don’t be evil” Google/YouTube is heading in that direction, I expect other companys with a more relaxed attitude towards evil to increase ads.

Where’s that leading to? Given the changes in online video, I’d expect to see subscription models to show up earlier or later that will allow users to see commercial free videos, including TV and movie content, which, in the long term, will substitute TV as we currently know it. Obviously, that statement is neither new, nor has it been proven yet, but given the receding time that is being spent in front of the TV (especially by the younger viewers) and the increasing time that is being spent on online video platforms, I’d say it’s a matter of time.