Log in

Learning to Love the Internet

19 May, 2006 By: Thomas K. Arnold

First there was iTunes, an online music store that lets users download thousands of singles and albums.

Now comes YouTube, an online video service that lets users post, watch and save thousands of videos, from obscure concert clips and snippets of popular films and TV shows to raunchy Japanese bra commercials, baby's first steps home videos and amateur strip shows.

In just a few months, YouTube is already streaming more than 35 million videos a day over the Internet and is among the 100 most-visited Web sites, just ahead of UPS and the Internal Revenue Service sites. YouTube also has managed to attract the ire of big media companies like NBC Universal and CBS for hosting copyrighted clips from the airwaves.

It was a “Saturday Night Live” sketch that appeared on YouTube last December, shortly after the service's official launch, that put the spotlight on the nascent service. The “Lazy Sunday” short, featuring a pair of white dudes rapping about going to see The Chronicles of Narnia, led to a steep uptick in site traffic.

It also put YouTube on Hollywood's radar, with NBC demanding the service remove the skit, which had already been posted at NBC.com and also could be downloaded for $1.99 from iTunes. CBS subsequently issued a similar cease-and-desist demand when YouTube aired a clip from the “CBS Evening News” showcasing an autistic basketball player.

And yet other big entertainment companies are exploring partnerships with YouTube and even posting trailers and clips to promote upcoming films, including Fast Food Nation from 20th Century Fox.

“The reality is, they have the right to enforce copyrights, and some of them do,” said YouTube's Julie Supan. “But that being said, we think there's an incredible promotional opportunity for them.”

Exposure on YouTube, Supan said, “is good for them.”

“It's good for media companies to harness the power of this community rather than cling to traditional business models,” she said.

Media companies, writes Andrew Wallenstein in The Hollywood Reporter, have a “schizophrenic attitude toward YouTube [that] reflects the undeniable promotional power of viral video, which sends clips bounding around the Internet's young-adult user base like a beach ball at a Nickelback concert.”

Indeed, when YouTube was soft-launched in May 2005 in San Mateo, Calif., by a pair of former Paypal employees, viewers were watching 30 videos a day. By December, when the service officially launched, the number had shot up to 3 million.

Today, YouTube screens more than 35 million videos a day, while users post 35,000 new clips, ranging in length from a few seconds to 10 minutes, each day.

“It's seeing quite a significant amount of traffic,” said Leeann Prescott, senior research analyst with Internet-traffic tracking firm Hitwise USA. “It's really taken a lead over the other video search sites since surpassing them in January. It's getting about three times more traffic than Yahoo Video, four times more traffic than Google Video and five times more traffic than AOL Video.”

In the past month alone, Prescott said, YouTube's market share of the online video market has increased by 40%. Already, there's talk that YouTube could be the next MySpace, the social networking site with more than 75 million subscribers that last summer was purchased by News Corp. for $580 million.

Prescott said YouTube functions as “sort of a complement” to MySpace, attracting the same young-adult demographic and drawing 20% of its traffic from the site.

YouTube operates under a simple premise: Users sign up for free and can upload videos for free. If copyrighted material winds up on the site and the rights holder complains, the material is immediately taken down; if users make repeated violations, their accounts could be terminated.

“While we believe we are complementing their programming and helping to promote it with entertaining short clips, we also respect the fact that copyright holders have a right to enforce it,” Supan said.

To minimize risk and at the same time keep users logged on to the site, YouTube doesn't let users download any videos. They can watch them, save them, even share them, but only within the confines of the YouTube Web site.

The company makes money through promotions and sponsorships, although by June, Supan said, it intends to begin capitalizing further on all the eyeballs it attracts by selling banner and rolling ads.

If any changes are in the wings, it's that Hollywood is becoming more accepting. Among the companies that already have posted trailers on the site are Fox, Dimension Films, New Line Cinema, Virgin/EMI and The Weinstein Co.

Add Comment