The first video that the New YouTube recommended for me? Lady Gaga. When in spud's name have I ever shown any interest in Lady Gaga?
Epic fail, as the kids say nowadays.
Does AdSense really bring enough money to websites though that if applied to YT vidz producers of original content could justify spending money to produce that content for YT?
The AdSense model could work for certain videos, particularly of the how-to kind, aimed at niche interests. My crocheting example - which I just pulled out of thin air, having zero interest in the field - could be a series of how-to videos for that niche market, which in turn would of course be the perfect market for hobby stores that sell crocheting supplies. Those stores are mom & pop types, and couldn't afford much in the way of advertising, but if they paid only for sales through their websites, it would be a no-brainer for them.
The real hold-up here is that while it's easy for big advertisers like Ford to match their ads with mainstream TV based on viewer demographics, matching up small companies scattered everywhere with niche tastes scattered everywhere is a much harder task.
The other thing YouTube needs to work on is the comments. I'm sure we've all noticed how idiotic/useless/embarrassing the comments are, because YouTube hasn't yet understood that the community they're building is an important product for them to sell.
Go back to the Crocheting How-To Channel. That's going to attract a scattered niche audience potentially from all over the world. It may be a tiny percentage of the population, but we're talking a tiny percentage of seven billion people. From that perspective, niche audiences can be huge, great places to advertise. But how will people know about the Crocheting Community on YouTube? Word of mouth. And the last thing YouTube wants is for some 12 year old trolls in the comments to be scaring away the paying customers.
The other issue is the kinds of videos we associate with TV and movies - scripted drama and comedy that have no practical application to a niche interest that can be marketed to. Keep in mind that TV drama and comedy evolved because of mass-market advertising and is adapted to that system. Change the advertising system, and the content must also change. There's no guarantee the new system will want drama and comedy like the old system did.
But that said, I could see (for instance) a space opera web series that is targetted at a niche audience, to whom you can sell other sci fi things - novels, video games. You may be able to expand into related niches. Let's say you have an
Honor Harrington style military space opera series. Maybe you expand into military fiction and videos. Maybe there's even a political slant to that group that certain candidates might want to influence.
Since all media, including novels and games, are headed towards zero value, it's best not to have advertising that depends solely on those things. If you're not making much money off something, there's not going to be much of an ad budget for it.
Because of that, I'd look more at expanding the notion of political candidates wanting to reach a certain market. Or, certain employers might want tor recruit from that group. They might be in the market for very specific types of products. You'd have to take a look at the characteristics of every one of these sub-niches and try to match them up with advertisers.
That's been a big problem for YouTube. 
