Monday, August 07, 2006

YouTube, Me Watch by Abram Sauer

© copyright

Rapid growth, consumer control, hyper word-of-mouth promotion, hungry competitors. Welcome to YouTube’s world.
For the uninitiated, YouTube is an online portal through which users can watch and share video content. Currently, it is not just a video site, it is the video site. It has achieved such status so rapidly that it seems fair to wonder where the service will go from here.

Founded in a garage in February 2005, YouTube officially launched to the world in December of that year. Popular media mentions helped the brand rocket to the upper echelons of online pronoun properties with names featuring “I,” “Me,” “My,” and “You.”

How high, how rapid? In the month of June, Nielsen/NetRatings data show that YouTube logged 19.6 million unique users; this represents a nearly 300 percent increase from January user-ship. And there appears to be no such thing as a summer lull. For the week of July 9, Nielsen reported 12.8 million unique viewers, up 75 percent from the previous week. That particular week, nearly half of all “Most Viewed” clips were of the 2006 World Cup Zidane “header.” Some were recorded TV coverage, but many were user-created original videos such as Zidane head-butt compilation. (Warning: Clicking on the link may lead to countless wasted hours.)

User-created content is at the center of YouTube’s web-2.0 pedigree: the idea that the “new” fluid Internet model will be based on user interaction and contribution. But, similar to blogs, copyrighted material is feeding YouTube’s success. Copyrighted material for which YouTube does not own the rights. This puts YouTube in a tricky position for the possibility of selling out and compromises its ability to make money through advertising.

Buying out YouTube could put an established media (or other) investor at risk for lawsuits from competing media companies about hosting their content (currently not as big an issue given YouTube’s neutrality.)

Advertising could be YouTube’s means to profitability. Already, American television network NBC has inked a deal with the site to promote its shows (seen recently in advertising for the film “Pirates of the Caribbean”). But advertisers could seek to interfere with content when it runs counter to their own objectives. Currently it’s not clear how much advertising the brand owners are willing to tolerate anyway. Earlier this year, YouTube co-founder Chad Hurley said in an interview with CNN Money, “We're going to sell sponsorships and direct advertisements. But we are building a community, and we don't want to bombard people with advertising” (May 11, 2006).

This idea of “community,” plus the site’s reliance on copyrighted material, puts YouTube in a very interesting position as a brand. In the conventional sense, a brand is owned by two groups, the brand owner and the brand consumer. The “brand” is where the owner’s desires and the users’ perceptions meet. In YouTube’s case, there are three brand owners. As in the conventional case, YouTube’s actions and communications converge with the audience’s perception to create the YouTube “brand.” The third element is the copyright owners, who have realized that they can leverage YouTube to create interest in their properties, but are quick to pull content if it is not to their liking. YouTube has to manage its brand based on consumer perception, but it doesn’t completely control its own product.

An added difficulty for YouTube is that it is lacking an emotional hook to differentiate itself from a pure functional service (think iPod). Users visit YouTube not based on any of the brand’s perceived values, but on its ability to give them what they want, when and how they want it. The service offering can easily be replicated elsewhere, better. Online social network Friendster suffered from this and subsequently lost its dominance to MySpace.

YouTube’s own challengers are advancing at a rapid rate. AOL is re-engineering its video site to mirror YouTube’s success, and CNN is launching CNN Exchange, which will house user-contributed video features. Then there are sites like,, Revver and Blip.TV, which share up to 50 percent of ad page revenue with the creator of the videos. Others like (currently in beta) sort through all video hosting sites (like YouTube and its competition) for search content, while specialty video sites like Pornotube concentrate on one point of interest.

If YouTube could be said to have a brand position, it might be one of selfless populism. Even if the site’s ultimate goal is to make money, the user perception is that it is a power-to-the-people portal through which a community serves each other and the little guy can share and watch for free. Meanwhile, competitor Eefoof’s tagline is “Make it. Post it. Profit!” The placement of the one exclamation mark sets a position that the contributor is motivated by more than just an altruistic sense of community.

With a potentially crippling copyright lawsuit on the horizon, it’s almost impossible not to compare YouTube to Napster. It’s easy to see a future in which YouTube will exist as a brand in recovery, scrapping for survival in a flooded marketplace it basically built. Its very name forever attached to a very short era.

Contact Abram Saueur in NYC:



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