March 30, 2006 1:53 PM PST

YouTube: The talk of Tinseltown

SANTA MONICA, Calif.--More than just teenagers and 20-somethings have begun flocking to YouTube, the fast-growing video-sharing site. The 13-month-old company has begun winning fans from within some of the country's largest media outfits.

Executives from heavyweights such as Yahoo, America Online and Turner Broadcasting were buzzing about YouTube's sudden success at the Digital Hollywood conference here this week. Even though it's not clear exactly how YouTube will make money, no company generated as much excitement at the gathering of Hollywood studios, electronics manufacturers and Internet media companies.

During one conference panel discussion, Oren Katzeff, a business development manager at Yahoo, was asked to identify a company that he believed was successfully exploiting broadband technology.

"YouTube is the company that has definitely caught my attention in the last six to eight months," Katzeff told about 60 conference attendees Wednesday. "It's the site my younger sisters just seem to spend hours on."

YouTube has sped past a host of competitors by tapping the public's thirst for reality programming. By mixing some professionally made clips, including music videos and movie trailers, with homemade content, YouTube has seen the number of viewings on the site shoot up from 3 million a day to 30 million since the Web site's December launch, according to YouTube spokeswoman Julie Supan.

Not everyone at the conference was impressed, however. Plenty of executives wondered how the San Mateo, Calif., company plans to fend off the likes of Google, iFilms and Atom Entertainment, all of which possess far more resources. And nobody knows how YouTube, which has 20 employees, plans to make money.

There is still no advertising on YouTube; it doesn't charge to view or upload videos; and its executives so far have been mum on their business plan.

Trevor Kaufman, CEO of Schematic, an interactive services firm, also noted skeptically that other Internet companies have temporarily caught fire with the teenage market before flaming out.

"I remember Bolt.com was once the place where all the kids used to go," said Kaufman, referring to the once high-flying community site that has fallen far behind MySpace.com and others. "I just don't know whether the company's brand is going to be able to stand up to others in this space."

Nonetheless, YouTube is proving its popularity. According to numbers provided by traffic-tracking company ComScore Networks, YouTube received 4.2 million unique visitors in February. Those numbers are good enough to outpace Apple Computer's iTunes (3.5 million) and put it within spitting distance of eBaumsworld.com (4.4 million) and AOL Video (4.7 million), both of which have been in business longer.

YouTube received a huge public-relations boost from a minor controversy after two skits from NBC Universal's "Saturday Night Live" appeared on the site. Both clips drew a lot of traffic before YouTube took them down at NBC's request. For the record, YouTube officially denounced piracy and said it has a strict user agreement that prohibits the posting of copyright content.

So, how does the company plan on cashing in on all this popularity?

Supan said that hasn't been decided yet.

"We're experimenting with different business models," she said. "It's not going to be a traditional model, that is for sure. Right now, we don't want to disrupt the user experience. But eventually, we're going to introduce extremely relevant ads that will benefit users and won't disrupt the service."

Lately, the company has indicated that it might attempt to charge entertainment companies to promote content on the site. YouTube announced on Tuesday that it is hosting clips from the E Entertainment channel's satire show "Cybersmack."

"We've been meeting with almost every TV network, record label and movie studio to talk about ways to partner and help them reach a broader demographic," Supan said.

What about Kaufman's suggestion that YouTube could be a flash in the pan?

Katzeff isn't buying it.

"It's scary because those 13- and 15-year-olds watching YouTube today are going to be the 20-year-olds in five years," he said. "I think somehow, you're going to see (YouTube) lasting."

See more CNET content tagged:
YouTube, media company, conference, Yahoo! Inc., America Online Inc.

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