Commentary

Is YouTube The Geocities Of Online Video?

In 1999, everyone wanted a Web site but few people knew how to code in HTML. The solution? Everyone created and hosted their Web site on Geocities. A huge Internet company ended up buying Geocities (Yahoo) and, over time, most good content creators left Geocities and built sites that they owned, operated and controlled.

Sound familiar? It should. Three years ago, it was hard to host your videos online. Flash players were rudimentary, content management systems were built on popsicle sticks and video streaming costs were high. As a result, everyone uploaded and hosted their video content on YouTube. YouTube's traffic grew and they too were bought by a big Internet company.

Today, no major media company makes significant money syndicating their content to YouTube and no viable economic model has emerged that properly compensates long form, scripted content creators for their development costs. Consequently, nearly all media companies are creating video destinations and/or building syndicated video offerings that they own, operate and control. Early data suggests that this strategy is proving effective, as broadcast audience networks, content sites and syndication offerings are beginning to scale both in users and in revenue.

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This shift in investment towards new and branded, owned and operated video sites is resulting in a shift in video consumption and the flow of media dollars. Users are demonstrating a willingness to find premium content on content owners' sites and content owners are aggregating the bulk of video media dollars in the market today. For the first time, YouTube is beginning to look a lot more like a hosting site than the preeminent television aggregator it once was.

So, is YouTube the next Geocities? The analogy is probably not a perfect fit. YouTube is far more powerful than Geocities was in its prime, and the Google machine is far more efficient than Yahoo ever was. That said, this new YouTube dynamic presents big opportunities.

Owned and operated online video properties will have the same challenges that other online media properties have had -- most notably infrastructure, content management, ad serving and advertising. This increased portfolio of challenges, coupled with the increasing fragmentation of the market, means that companies solving real customer problems can build big businesses.

And, as with other media segments online, fragmentation means there will likely be multiple winners.

8 comments about "Is YouTube The Geocities Of Online Video?".
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  1. Jeff Bach from Quietwater Media, March 16, 2009 at 12:29 p.m.

    Hello ???? can anyone say "micropayments"? How about "Google Checkout"?

    I think it entirely reasonable that Google COULD start charging a pittance say 50 cents to upload a user-generated video. Google could ALSO start a five dollar per month subscription for unlimited viewing. Maybe 7.50 per month for ad-free viewing. Maybe 50$/year to offer some long term advantage. Google Checkout is languishing and forgotten. Here is the PERFECT opportunity to use it in a big way. Micropayments solve many problems. Someone with the heft and volume of Google could get Visa and Mastercard in order and put micropayments on the map as an easy consumer tool. This could change the online revenue landscape (No I do not work in this industry).

    With these small and tolerable revenue model additions Google would:

    #1 more or less wipeout all the other branded models and retain their position in the industry. Youtube has the eyeballs. We all know that and want that. I, as a content creator, do not want to put in the effort and expense of building traffic. I would MUCH rather pay to play on Youtube in lieu of the time and effort to build my own traffic stream. I'll bet 98% of the creators out there would as well. Hwood and the letter networks can do their own thing. Youtube is about the "You" right? not the nasty ~!@#$ at the letter networks anyway.

    #2 - With a subscription card, Google does decrease their viewership but it should retain their most serious users. I would rather get 100 million dollars from 500 million users, than ZERO from a billion users. The point is that Google gets revenue from their users, where now they get virtually NOTHING.

    #3 - Google splits the revenue with the creators on a per click basis (of some sort). So now creators have a reason to continue using Youtube AND they have a reason to produce new content. Google is still keeping some reasonable fraction of that money generated from content viewing.

    Without this sort evolution of their revenue and usership model, they will go the way of GeoCities.

    C'mon Google make us all happy! Start making money from a subscription model! Free is not right and is killing the independent content ecosystem! Subscription viewing can be affordable to nearly all and offer a sustainable business model.

    Jeff Bach
    Quietwater Films
    Madison, WI.

  2. Patrick Boegel from Media Logic, March 16, 2009 at 1:27 p.m.

    The bottom might need to fall out on users who seek content before they realize life is not free, in the meantime I don't anticipate Google will shoot themselves in the foot anytime soon.

  3. Gordon Vasquez from RealTVfilms.com, March 16, 2009 at 4:07 p.m.

    The challenge is getting your Brand out there -- YouTube offers a great Branding Opp -- and you have to start somewhere.

    After 14 months and 1500 Interviews we are starting to narrow down the distribution sites. We have about 500 Videos in our Facebook account. FB has Insane popularity but they do not offer stats or an easy way to search your own videos -- I am sure the stats will be ON shortly. Facebook just Cut-Off the EMBEDD view outside FB -- you need to have a FB account and logged in --to see an EMBEDD Video -

    Gordon

  4. Jim Kass from Freelance, March 18, 2009 at 2:24 a.m.

    Jeff,

    Would you prefer a paid subscription to Hulu or YouTube. YouTube is what it is because it's free - free to use, free to distribute - free to well, everything.

    If they charged subscription model - would you have to be a subscriber to watch an embedded video? Of the billions of monthy streams, how much of that is from embeds? In fact, if you are a content creator and distribute on YouTube, how many people are watching your videos on YouTube, and how many are sharing and distributing them on sites like Facebook?

    Yes, subscription models do make sense, but not sure that YouTube is right for that business.

    I seriously doubt YouTube is going to be going away anytime soon. There will always need to be a place to watch clips of last night's funny moment on SNL, and a simple solution to host video for free to show your neighbor's cat's crazy antics.

    For that matter, there will always be a new generation of amateur filmmakers who will need a place to get their careers started.... YouTube will always be the destination for video of this type. And we're going to be able to watch YouTube on every device on the planet... whereas other networks, they'll be a bit more targeted.

  5. Jeff Bach from Quietwater Media, March 18, 2009 at 10:30 a.m.

    hmmm......viewed another way - YT is filled with stuff from people who think their cat is funny. A huge chunk of YT content is like this and will NEVER be fit for advertisers. As long as it is easy for people to upload "stuff", advertisers will shy away from that low-value stuff and advertising will remain a problem for Goog on YT.

    Charging an upload fee removes a significant amount of that low-value content, but it should not stop the bulk of the higher value content. An upload fee would then in theory improve the advertising landscape for YT and make it easier and more desirable for advertisers to do more with YT. Even a teen ager has 50 cents in their pocket. Getting signed up online would be the hurdle. Achieving an easy to use micropayment process would solve that problem. It would be HUGE. It could even steal away business from Paypal.

    Charging a viewing fee would most likely lessen YT's viewer numbers. In my opinion, the viewers it would lose are the most casual and therefore of least value. Dedicated teens and tweens would get Mom and Dad to do the online form. 20-somethings could either do credit cards or some form of micropayment that Goog could pull out of their existing code base. The rest of the population could handle this change.

    While Goog's advert rates may well drop, they would have new revenue coming in from uploads and viewer subscriptions, which could make up for the decreased ad rates. Goog could possibly have a 3rd stream from selling their micropayment process to others who want to do micropayments.

    The viewers that go elsewhere? They become someone else's problem, driving up bandwidth and storage costs and copyright issues for someone else, further lessening Goog's cost of business wrt YT.

    Will anything happen like this happen? I doubt it. Goog is big and mature now. Change gets harder the bigger and older you get. The young engineers that used to sleep in the office are now finding houses and GFs/wives and having kids. Their desire is lessening, which makes change harder again (see MSFT for an example of aging tech companies).

    Someone somewhere has to do something. YT is in the perfect spot. Free may be what we are all used to, but it DOES NOT WORK. Goog's ongoing losses with YT prove that. It does not work for the vast majority of content providers, hosting providers, or copyright holders, we are seeing this every day. I think it is better to try than it is to passively sit by and watch it shrink.
    Jeff

  6. Richard Monihan, March 18, 2009 at 3:28 p.m.

    YouTube is efficient in a different way than Geocities, so the comparison is not completely valid.

    While video outlets and distribution today is becoming easier outside of YouTube, YouTube still offers an interesting value proposition. It is the democratization of video and the internet. Charging upload or subscription fees would kill the value of YouTube, not enhance or improve it.

    It remains the place where people can do online video quickly, easily, and inexpensively, to enhance their own sites AND get distribution on wide scale. It remains the only place where a nobody can still get their message heard and spread it quickly (assuming they have a valid or desirable message).

    It is true that as YouTube's offerings grow, the value of each successive upload becomes less and less. However, in that mass of uploads, there will be occasional uploads of tremendous value that would otherwise never find an audience.

    Is YouTube the Geocities of video? No, not by a longshot. The similarities exist, but I suspect they are minor in nature.

  7. Pinaki Saha from Me!Box Media Inc., March 19, 2009 at 2:16 p.m.

    @Gordon Vasquez

    I guess what your note suggests is that FB platform is another of those walled gardens where they do not want you to push viral syndication off of their platform and neither do they want to co-place value against your video in other sites and dilute their ownership. Believe they think that their 150mm user base is a big enough garden to play in!

    However, the interoperability of content from across platforms is the true essence of Internet. When consumers realize that, these walls come down as they slowly loose eyeballs. Now FB viewership for videos is not going to fall anytime soon. But, they are also not letting the producer pass through analytics. This could eventually hurt their network effect with video sharing and lead to segmentation of vendors/producers.

  8. Jeff Bach from Quietwater Media, March 23, 2009 at 9:18 a.m.

    My interest remains in evolving the way that online content generates revenue. In spite of prevailing attitudes, at some point the customer becomes less correct. Just because "free" has been the status quo, does not mean it is written in stone for it to remain so. The content model on the web must evolve, in my opinion.

    I offer these two "apocalyptic" articles as further rebuttals against the current advertising-supported model:

    http://www.techcrunch.com/2009/03/22/why-advertising-is-failing-on-the-internet/

    AND

    http://adage.com/article?article_id=135440

    Sadly, in my first read I saw nothing constructive about what should be done in the future, only more of why our current model is so nasty.....

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