It’s taken a while but YouTube is officially pushing back at the various estimates on how much money it costs parent Google by satisfying our collective hunger for million of video clips every day. Google paid $1.65 billion for YouTube in 2006, when it bought the site from Chad Hurley and former CTO Steve Chen (pictured).

Various YouTube executives we’ve spoken to privately over the last year have bristled at the idea that they are an expensive experiment for Google without a clear profit-making business model. Google CEO Eric Schmidt took the first step in a change of communications strategy in an group interview with reporters at the Sun Valley conference two weeks ago, and to more listeners on the Google earnings call on Thursday. His central point was that everyone’s favorite video site is on the path to profitability.

On Monday, two of YouTube’s PR executives hit back at some of the myths about YouTube’s business with a blog titled “YouTube myth busting.” These include claims that it only features short-form, grainy user-generated content when in fact it has deals with Hollywood partners and features HD content. They also said more than 70 percent of AdAge Top 100 marketers ran campaigns on YouTube in 2008.

But two disputed myths that raised the hackles of the tech blogosphere were related to 1) estimates of YouTube’s cost structure and 2) the “oft-cited” stat that YouTube only monetizes 3-5 percent of the site, which the PR execs said was “old and wrong.” The bloggers wanted some numbers and they didn’t get any from this YouTube’s blog

Here’s Henry Blodget of Business Insider:

Enough already. We’re glad that YouTube has not turned out to be a disaster. (We weren’t among those who thought it would be). But we can’t stand this attitude. If Google is tired of people “picking any number to fit any theory,” then they should just publish the facts.

Peter Kafka of AllThings Digital calls it ‘modest boasting‘:

So really, the big takeaway here is that the Google folks are feeling ever more confident about YouTube’s prospects, enough to do some public chest-beating. But not enough to actually talk about those prospects in concrete terms. YouTube says that estimates that the site can sell ads against only three percent to five percent of its video inventory, first asserted in a well-reported Wall Street Journal piece a year ago, are “old and wrong.” But the company won’t say what percentage of the site it does sell.

Paid Content thinks it’s “myth-spinning” by YouTube and wasn’t convinced either:

The only interesting part comes here: “The truth is that all our infrastructure is built from scratch, which means models that use standard industry pricing are too high when it comes to bandwidth and similar costs. We are at a point where growth is definitely good for our bottom line, not bad.” Which gives credit to this analysis by RampRate last month, which said the costs of video delivery for YouTube are a lot lower than what analysts have previously estimated.

(Photo: Reuters)

AOL Chief Tim Armstrong has done several interviews with the press to mark the first 100 days in the role. In most of the articles he explains his focus on advertising primarily built around AOL’s collection of premium content brands.

No brand is more premium right now, in advertising terms, than TMZ.com, the Hollywood gossip website AOL jointly owns with Telepictures. Both AOL and Telepictures are units of Time Warner Inc.

TMZ is currently one of the hottest properties on the Web, especially after it was the first to break news of Michael Jackson’s death. In the Web advertising world it caused a bit of a stir by deciding to handle its own advertising sales rather than use the girth of AOL’s team.

Armstrong said he is not too concerned with TMZ’s strategy as such. He said he supports TMZ doing whatever is best for TMZ to make it even more successful.

In general, TMZ has become a fairly major brand. When brands get that big, having sole representation in the market potentially makes sense. For us, job No . 1 is for all our properties to be successful. I think we would be very enthusiastic for TMZ to have the most successful outcome. We’re not sensitive about what TMZ wants to do for the ad sales.

What is less clear, though, is TMZ’s future ownership. It might become wholly owned by AOL, which is currently building up it content sites with recent acquisitions such as MMAFighting.com and Patch Media.  This is all Armstrong would say for now:

As we separate from Time Warner, TMZ is one of the areas that needs to be discussed.

Armstrong didn’t think it’d be appropriate to discuss those options with Reuters just yet.

(Photo: Reuters)

Microsoft is trying out a series of new home pages for its MSN web portal in an effort to drum up some new — and likely younger — readers to attract advertisers.

The first experiment, launching today, is an entertainment-themed home page, promising news, gossip and videos on all manner of celebrities, in much the same way that many rivals do.

Microsoft’s money-losing online business is hoping to capitalize on the 84 percent of Internet users it says visit entertainment-related sites, building on the 70 million or so people it says already visit the MSN site for entertainment content.

Microsoft sites badly need more readers to lift themselves up from a lowly fifth in the online display ad market, trailing Yahoo, Fox, Facebook and AOL. The company may yet hatch some sort of deal with Yahoo to bolster its online presence.

For now, MSN is planning on going it alone. The new-look home pages won’t replace the standard MSN home page, but they are options users can choose to get more of what they want. More themed home pages will be launched in coming months, but Microsoft hasn’t said what they will be.

The Online Publishers Association got a bunch of Web publishers (including Reuters) to agree to test a new series of ad formats that it says will “stimulate a renaissance of creative advertising on the Internet.”

Renaissance? Indeed, says the OPA. The ads will:

• Inspire creativity and high-quality advertising
• Provide a greater share of voice for the advertisers
• Introduce a measurement to capture impact
• Enhance interactivity to build user engagement with brands

Or, roughly translated: The new online ad formats are supposed to work because there will be fewer of them, they will be larger, they theoretically could command a higher fee for advertisers who buy the space, and more people will buy stuff because of them.

Here are the formats:

• The Fixed Panel (recommended dimension is 336 wide x 860 tall), which looks naturally embedded into the page layout and scrolls to the top and bottom of the page as a user scrolls.
• The XXL Box (recommended dimension is 468 wide x 648 tall), which has page-turn functionality with video capability.
• The Pushdown (recommended dimension is 970 wide x 418 tall), which opens to display the advertisement and then rolls up to the top of the page.

This is intended as a way to succeed the era of banner ads because who, after all, looks at them except as a prelude to irritation? (No one, according to lots of studies)

But wait! MediaMemo blog author Peter Kafka at All Things Digital raises an interesting point in his headline from earlier on Tuesday about the OPA ad formats:

Coming to a Web Site Near You: Bigger, More Obnoxious Ads

Kafka explains:

The key point is that the ads are going to be ginormous and gaudy-think monster trucks with sirens and flashing lights. … The reasonable thing to point out here is that there’s nothing that prohibits advertisers and publishers from doing interesting and creative stuff with these formats-just like Apple. And if you’re really lucky, you’ll find that the ads are even about stuff you’re interested in learning about. … But if the ads aren’t interesting and aren’t relevant to you? It’s the kind of thing that could drive a mild-mannered person to install ad-blocking software.

Here are the companies whose sites will start using the new ad formats:

BabyCenter, Bizjournals, Bloomberg, BusinessWeek, CBS Interactive, CNN, Condé Nast Digital, Discovery Communications, ESPN, Forbes.com, FOXNews Digital, IDG, iVillage Network, Martha Stewart Living Omnimedia, Meredith Interactive, msnbc.com, MTV Networks, NBC Universal, New York Media, The New York Times, Reed Business Information, Reuters, Time Inc., USA Today, Wall Street Journal Digital Network and Weather.com, with more OPA members to be announced.

(These photos, which show a G.I. Joe ad in “open” format above, and “closed’ format below, are courtesy of Online Publishers Association.)

After jumping to become the sixth most viewed online U.S. video site in October, Hulu managed to keep its spot in November despite not having the benefit of a Sarah Palin/Tina Fey boost from Saturday Night Live. 

Hulu is the new star of the rapid growth of online video as a mainstream media in U.S. New comScore data shows more than 77 percent of all U.S. Internet users watched online video.  

YouTube is, of course, the most watched video site by quite a stretch, with more than 12 billion videos watched. Fox Interactive Media (mostly MySpace) stands at No.2 with 439 million; Viacom Digital has 325 million and Yahoo next with 304 million. Microsoft had 296 million.

Hulu had 227 million videos viewed and maintained its highest position even though several commentators had expected Hulu’s boost would fade after the election. It’s also interesting because unlike YouTube, Hulu has managed to populate most of its mix of TV shows and old movies with advertising. This may be annoying to some online viewers but it is widely admired in the digital advertising world.

The slick site, owned by News Corp and NBC Universal, keeps winning friends and fans across the board. The New York TImes on Sunday, for instance, professed its love thus:

On Hulu, you can also watch full-screen, in nice, rolling high-resolution. After years of watching YouTube, I thought I had stopped caring about glamorous presentation. But man: the neatness and elegance of Hulu — where you can watch hundreds of whole shows from NBC, Fox and other networks, as well as movie and news clips — is so relaxing.

Top U.S. Online Video Properties* by Videos Viewed November 2008

Total U.S. – Home/Work/University Locations

Source: comScore Video Metrix

Property                    Videos        Share (%) of

                             (000)           Videos

Total Internet            12,677,063         100.0

Google Sites               5,107,302          40.3

Fox Interactive Media        439,091           3.5

Viacom Digital               324,903           2.6

Yahoo! Sites                 304,331           2.4

Microsoft Sites              296,285           2.3

Hulu                         226,540           1.8

Turner Network               214,709           1.7

Disney Online                137,165           1.1

AOL LLC                      115,306           0.9

ESPN                          95,622           0.8
*Rankings based on video content sites; excludes video server networks.  Online video includes both streaming and progressive download video.