YouTube now streams a billions video clips a day. User generated material accounts for over 40% of all online video streams but produces no more than 4% of the advertising revenue for online video. That is unlikely to change over the next five years, according to a report from informitv partners TDG Research. The main value seems to be in cultivating an audience for commercial material.

The report on Online TV and the Future of Digital Video Advertising also suggests that while long-form material represents only 2% of the total number of streams, it currently generates over 40% of the advertising revenue. Short clips generate nearly 55% of the revenue, with less than 4% accounted for by user generated material.

These findings are emphasised by the relatively disappointing advertising revenues so far reported for YouTube. Despite receiving a billion video views a day, advertising revenue this year is likely to reach only around $200 million, somewhat short of expectations for its parent company Google, representing around 1% of total turnover.

Advertisers are wary of their advertising being placed around user generated material that may taint their brands.

One factor is that many of the so-called user generated clips have been generated out of copyright material. Google faces the prospect of litigation from rights holders such as Viacom.

A judge has ordered Google to hand over all logs relating to the viewing of YouTube video clips since it acquired the site in November 2006.

Meanwhile YouTube seems to be avoiding selling advertising against videos that may violate copyright. Most of the advertising on YouTube is currently around clips provided by partner media companies.

Online TV and the Future of Digital Video Advertising is published by informitv partners TDG Research.