January 10, 2007 10:00 AM PST

YouTube rivals look for answers

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YouTube may be the only video-sharing player to have earned a profit, said two executives who have seen the company's financial books. YouTube, the sources said, recorded a relatively narrow profit in at least one of its recent quarters.

"We're all still experimenting with how we're going to make money," said Veoh Networks CEO Dmitry Shapiro. "We know we can make money through advertising. We don't know whether we can do that by serving an ad with every video or every other video or whether the ads will be served before a user watches the video or after...The only thing we know for sure is that we will make money."

Oliver Luckett
Credit: April Arellanes
Oliver Luckett
Revver co-founder

Others have responded to YouTube's success in recent weeks by overhauling Web sites or revamping business models.

Veoh, whose investors include Time Warner and former Disney Chairman Michael Eisner, recently announced that it has begun helping videographers charge for videos. The company also said it can post a video to any of the top video-sharing sites, including YouTube, saving a consumer time and effort.

YouTube's competitors may recognize the company's tight grip on the sector, but say they don't necessarily think the company can hold it for long. Luckett, for example, predicted that YouTube's legal troubles with copyright violations, when people post unauthorized video clips to the site, are likely to plague Google.

A YouTube representative declined to comment for this story.

So if video-sharing companies are no longer following in YouTube's footsteps, in which direction do they plan to go?

Luckett and Maigret plan to continue working in online video but aren't ready to discuss details. They do say they learned one crucial lesson from YouTube: The public wants professionally crafted video made available on the Internet. Clips from TV shows such as NBC's "Saturday Night Live" and other copyright material are to a certain extent responsible for YouTube's popularity, Luckett asserts. Eventually the TV and movie producers will want greater control. Helping them do this is what Luckett says he plans to do in the future.

"Among the public, there will be a flight to quality," Luckett said. "The amateur-made stuff found on these (user-generated) sites is the same content found on 'America's Funniest Home Videos.' It was one of the most syndicated shows of all time. It's a fabulously funny show, but it's not an industry. Hollywood studios own the content people want. They should be dictating the business models."

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