A Brief Overview of YouTube …
The domain name “YouTube.com” was activated on February 15, 2005; the company was founded by Chad Hurley, Steve Chen, and Jawed Karim. The angel-funded enterprise offered their first public preview of the site in May 2005. They made their official debut that November. Bandwidth costs and potential advertising profits inspired a venture capitalist, Sequoia Capital, to get involved.
Within six months, YouTube was one of the fastest growing sites on the Web and was ranked the 5th most popular website on Alexa. More than 100 million video clips were viewed daily on YouTube, with an additional 65,000 new videos uploaded every 24 hours.
On October 9, 2006, it was announced that the company would be purchased by Google for $1.65 billion in stock. The purchase agreement between Google and YouTube came after YouTube presented three agreements with media companies in an attempt to escape the threat of copyright-infringement lawsuits. Before being purchased by Google, YouTube declared that its business model was advertisement-based, making 15 million dollars per month.
YouTube is a commodified Internet space, ie, they generate revenue with the help of mass collaboration by peer-produced content which draws over 70 million unique visitors a month watching an average of 40 videos each. In other words, the content producers draw in the video consumers. Today, YouTube is ranked #3 in web traffic globally by Alexa, behind Google and Yahoo!
If you watched the video link above (October 9), you basically heard Chad and Steve laughingly saying thanks for making us multi-millionaires … we’re gonna keep making it better for you because you helped us get here. Informal, almost amateur videos of people clowning around ad-lib (like the founders in the video) are part of the major driving force that made the website such a huge success.
YouTube’s Business Model Solutions …
The acquisition by Google combined the biggest force in search and Internet advertising with the biggest force in online video. In 2006, YouTube won TIME magazine’s “Invention of the Year”. You can follow YouTube’s traffic details here.
While Youtube traffic has skyrocketed, they have been steadfast in their admission that they haven’t been able to effectively monetize their traffic in a profitable manner. On the surface, it’s almost inconceivable that any website with so much traffic and marketshare could be in anything but an enviable position.
Nonetheless, Hulu which has a fraction of YouTube’s marketshare is notably more profitable. Hulu has the right to sell advertising in and around every single video on its site. YouTube, however, is limited in its potential advertising revenue because as a broad-based hosting service it is challenging to target ads to relevant user-generated content.
Clearly this contrast has caught the attention of Google money makers. One recent monetization system from YouTube was “Click-To-Buy”. Through partnerships with companies like EMI and Electronic Arts, YouTube is adding links to iTunes and Amazon (DRM free) to download music and video games.
In November, they announced a new advertising program in “Sponsored Videos”. They’re now serving “Cost Per Click” sponsored video ads alongside their video search results, targeted by keywords.
On December 2, YouTube’s director of content partnerships, Jordan Hoffner, outlined the Google-owned video site’s plans to monetize its content during a keynote address at the Broadcasting & Cable / Multichannel News OnScreen Media Summit. YouTube is now taking a number of different approaches to build its revenue stream, hoping to capitalize on its market dominance. One of the ways YouTube is trying to achieve that is through VideoID, fingerprinting software that lets participating content owners remove, track, or place ads on their content.
Once viewers find that professional content, YouTube is trying a number of approaches to monetize it. In addition to more standard lower-third ads and ads next to videos, the company is placing a focus on CTB and co-branded entertainment opportunities. With YouTube’s recent deal with CBS, classic episodes of shows such as MacGyver and Star Trek are already available on the site, and Hoffner says more content deals are coming.
YouTube Angers Its Loyal Base …
As part of this transition to better monetize their marketshare and to establish themselves as a place for premium content, aggressive community guideline changes have enraged many long-time visitors and uploaders. In fact, there is a growing movement to boycott YouTube and Google December 19, 20, and 21. Moreover, numerous videos on the site are promoting the resistance effort.
Here’s one of the scores of such requests:
Some of YouTube’s drastic community guideline and communication changes include the following. (Note that there are so many angry comments on those two YT Blog links, that the pages can load and scroll slowly.)
- • a stricter standard for mature content
- • an active effort to prevent copyrighted background music
- • demotion of video rankings based on sexually suggestive content
- • demotion of video rankings based on use of profanity
- • video thumbnail selection restrictions by image content
- • a new standard for accurate video descriptions, tags, and titles
- • acceptance of widescreen, higher definition videos
- • usage of spacebar controlled pause/play toggling
- • restriction from downloading by services such as KeepVid.com
- • addition of a privacy-violating Recent Activity box on channels
- • removal of the ONLY opt-in communication broadcast tool, Channel Bulletins
- • limit of four comments or private messages per session
Some of these changes are certainly justified. YouTube is not a place for pornography, copyrighted background music, or misleading descriptions. However, two of these “new and improved” mutations are absolutely ludicrous.
To demote a video’s rankings (most discussed, most responded, and most viewed) due to some arbitrary algorithmic calculation DESPITE overwhelming visitor approval is outright censorship. These rankings are part of what draws in the millions of viewers and uploaders. Moreover, by altering the search algorithms, YouTube can now make it nearly impossible for visitors to find relevant videos.
And, the removal of the very popular YouTube bulletin feature is a flagrant attempt to prevent users from communicating with one another. The old bulletin definition was:
The “new and improved” bulletin gimmick is a primitive technique for posting a VERY SHORT message to YOURSELF on your own channel. There used to be a much better bulletin system, but apparently YouTube did not want friends networking with a convenient opt-in, reader-activated communication tool. Now, the ONLY way to do this is by spamming all of your friends with private messages.
Despite a staggering amount of negative feedback from their community, YouTube remains rigidly adamant about retaining this blatant content ranking censorship and utter elimination of the primary communication tool among friends.
You may be able to contact YouTube and some of their employees with the information below. Use this data at your own discretion and risk. Remember to be polite and professional. We recommend email communication. You may want to express your concerns with the following message.
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Vice President – Business Development
Sales/Advertising Operations Manager