Much is made about YouTube and the democratization of content, but if the top-20 YouTube videos of all time are any indication, the future of YouTube is corporate, as The Guardian reports.
A look last week at the site's current 20 most viewed clips of all time--all with more than 50m hits--offered a snapshot of the corporatizing effect. A good half of them were professional music videos...Even among actual user-generated content, many of the most popular clips are based on bestselling pop culture.
So, while Hulu has been winning the profit war against YouTube because of its focus on quality, corporate quality may end up propping up YouTube before long, and pushing out eyeballs for user-generated content in the process. Nick Carr has long pilloried the glorification of the "amateur class," and has derided YouTube's staying power as a bottoms-up phenomenon. It looks like he may be right.
We keep wanting to tell ourselves that the Internet and the "mass collaboration" it engenders has changed everything. But this appears to be more aspirational than actual. It still costs a lot of money to consistently create great content (and software). It still costs a lot of money to market it.
The only cost that appears to have gone down is that of distribution. On the Web, distribution is (largely) free, which is both a blessing and curse. It facilitates piracy (making The Dark Knight perhaps the most pirated movie of 2008, for example) just as much as it facilitates distribution.
Until we come up with ways to manage content online that don't unduly impede distribution while simultaneously safeguarding content for its creators, YouTube will be stuck with cats falling off TVs rather than higher-quality content like The Office.
Over at All Things Digital, Peter Kafka has some interesting news for those that believe YouTube won the online video war: it's actually losing.
Hulu.com, that stodgy competitor created by News Corp. and NBC, is beating YouTube, at least in terms of profit: Hulu is making roughly $12 million in profit, while YouTube is bleeding cash, according to Screen Digest analyst Arash Amel, with whom Kafka spoke:
Amel's model assumes that while Hulu is showing far fewer video streams to many fewer people than Google, it is able to sell ads on most of them-perhaps 80 percent of all streams have a paying advertiser, he thinks. Google, meanwhile, is thought to be able to sell ads on just 3 percent to 4 percent of its views.
Just as important, but not widely discussed: Amel believes that YouTube's costs are much more significant than most observers guess. That's because YouTube isn't just paying massive bandwidth and hosting costs for all those clips. It's also paying out huge licensing and content fees to copyright owners like music labels. Amel thinks YouTube is paying more for those fees than it does for infrastructure/bandwidth.
Perhaps we should be blaming the entertainment industry for charging such high fees and for withholding its content from YouTube, but this misses the mark. The entertainment industry wants to make money, and apparently feels that YouTube doesn't adequately protect its intellectual property. There is no reason that YouTube couldn't displace Hulu: it simply needs to show equal care for the industry's IP.
It also needs to improve quality. This is, of course, possible, as Monty Python's recent foray into YouTube suggests.
This will be hard as long as YouTube's model thrives on user-generated content, a significant portion of which turns out to be user-pirated content. (I should know, I was booted from YouTube for uploading a video that I shot at an Arsenal game last year. I didn't have broadcasting rights....)
This isn't to suggest that YouTube should become Hulu. It just means that YouTube needs to find advertising models that are suitable to its content...like user-generated commercials.
YouTube has spent years trying to figure out how to monetize its mostly amateur-quality, user-created content.
The company has turned to pre-roll and post-roll ads, but Google CEO Eric Schmidt acknowledges that the "perfect ad product for YouTube has not been invented yet."
Perhaps Google is looking to the wrong inventors.
Traditional "Madison Avenue" advertising has failed YouTube. I agree with the sentiment expressed recently on the Marcom Professional blog:
In my opinion, one of the reasons that videos spread is the homemade quality....People are advertised to thousands of times a day. We see countless commercial messages all the time. We crave authenticity.
So why not user-generated commercials? Yes, I know there are all sorts of trademark and other concerns, but let's face it: I'd rather watch an amateur video for Heinz Ketchup than just about anything Heinz could develop. (In fact, someone just sent me this homemade video for "Ketchup Boy," pitching Heinz Ketchup.) I bet user-generated commercials would actually become a destination in and of themselves.
How about it, Google?
I never expected Hulu to work out, but according to ReadWriteWeb's review of a recent report from LiveRail, it may actually be doing better than YouTube in terms of online video monetization.
Why? Because Hulu is apparently able to sell ads against 100 percent of its video inventory, while YouTube is struggling to hit 3 percent. User-generated video content, it would appear, is not nearly as lucrative as selling advertising against professionally-generated video content....
Hulu has better content, and higher quality of video, even though it has far less overall content. According to LiveRail, Hulu hosts 88 million videos, compared to YouTube's 4.2 billion. When I want a Saturday Night Live sketch, however, I find it on Hulu, not YouTube (at least, not for long on YouTube).
Less content, but better, seems to pay, at least in the video world.
Even so, is it just a matter of time until higher bandwidth commoditizes video, as well, to the point that it will be as "worthless" as text? Maybe. At that point, it would make a lot of sense to bundle in pricing for video with my monthly ISP subscription. I'm happy to pay. I just don't want to have to think about it. Make online video payment as easy as paying my cable subscription.
I agree with Nick Carr. Wholeheartedly. Google's new ad-supported model for YouTube (i.e., consuming 20% of the already small video screen with an ad) is heralded by Google on its blog.
As Nick notes, Google isn't in the charity business, and some sort of advertising was always on the cards. But it's suggested format is hardly going to be a pleasurable experience:
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Where else would we find all those funny videos featuring people getting hit in the crotch? And that is, in fact, the source of a fair amount of YouTube's traffic, according to WebProNews. I don't know about you, but I don't feel like my day is complete without watching a cat fall off a TV, seeing people dancing on treadmills, and such.
YouTube is the new central repository for crotch-smashing, according to the article:
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