What is it about youtube.com that has made it so successful so quickly ? Is it the amazing quality of user generated content ? Is it a broadband fueled obsession with watching short videos ?
No & No.
Youtube's rapid ascension to the top of the traffic ranks can be attributed to two and only two reasons:
1. Free Hosting from any 3rd Party site
Hey, why pay for bandwidth for a video if you dont have to ? A blog, a myspace page, an email, any website. Just throw in some html in Youtube.com foots the bill for bandwidth. Sure you are limited by size of file, but so what. Just chop it up into parts 1 through N. Its fast, easy and free.
Come to our website and use our video hosting services, we can party like its 1999 all over again !
2. Copyrighted music and video.
I dont have a count, but i bet Daniel Powters' Bad Day is attached to some video snippet of every sporting event ever played , with links sent to fans of every losing team. PIrates season, You had a Bad Day. Spurs vs Mavs. Mavs vs Suns, Mavs vs Heat , Yankees vs Red Sox, etc, etc, etc. Bad Day, Bad Day , Bad Day. If Daniel had a nickel for every time his song was used in a YouTube sports video, he would be a much richer man.
This so reminds me of the early days of Napster. They were the first to tell you it wasnt illegal. They didnt host anything but an index to link to all the illegal downloaders. Youtube doesnt upload anything illegal and will take down whatever you ask them to. Sounds legit right ?
No, but thats not the thing. The thing is the shock that until Universal Music Group apparently started to put the pressure on them, no one had sued them. Considering the RIAA will sue your grandma or a 12 year old at the drop of a hat, the fact that Youtube is building a traffic juggernaut around copyrighted audio and video without being sued is like.... well Napster at the beginning as the labels were trying to figure out what it meant to them. With the MGM vs Grokster ruling, its just a question of when Youtube will be hit with a charge of inducing millions of people to break copyright laws , not if.
And its not just people putting copyrighted music to copyrighted video to create a new work of user generated content thats going on here. ITs also become a cheap and easy way to get music. Find a new hot song, and some kid is doing a goofy dance to it and uploading it to Youtube. Some have decent audio quality. So just search for the songs, create a playlist, minimize the window and play all your favorite songs as often as you want. For free. And of course if you have no fear for the copyright police, you can use tuberaider and keep a copy.
And its not just copyright lawsuits that will end up severely impacting Youtube's business, its that their business is too easy for the people who own the copyrights to copy.
If Daniel Powter wants to encourage everyone and anyone to put Bad Day music behind user created videos, its certainly easy for him or his label to do. Its just a question of who will pay for all the bandwidth involved. If the NBA wants lots of versions of Bad Day or any other song backing videos of their games, they would be smart to do a deal with his label and have their own little hosting section on nba.com . As would any copyright owner. Maybe TNT will offer up the ability to host user generated voice overs of Charles and Kenny. Now that is using technology for a good purpose.
Whats worse for Youtube is that there might finally be an economic model for the copyright owners to host their own videos. Advertisers are chomping at the bit to buy rich media advertising and copyright owners are chomping at the bit to provide them broadband content for their ads. (Of course we are just a year away from there being far more video available than advertisers, but thats a future blog entry)
So you can pretty well bet that every and any copyright owner is going to be jumping up and down telling Youtube to remove every bit of content with any copyrighted material. The double worse news for Youtube is that wont be easy. How are you going to tell Barry that he has to take down the video of Aunt Sally getting her groove on to Long Tall Sally, and Uncle Willie doing the Hand Jive at his Bar Mitvah ? That those are both copyrighted songs that Cousin Brucie, the DJ played, and we encouraged you to break the law when we made it so easy to post them and send links to your entire family ?
How are they even going to find every instance of copyrighted music behind some personal videos ? They will have to. And it wont be easy.
Take away all the copyrighted material and you take away most of Youtube's traffic. Youtube turns into a hosting company with a limited video portal. Like any number of competitors out there that decided to follow copyright law
Youtube, we hardly knew you.
UPDATE: This morning the WSJ wrote that Warner Music and Youtube announced a revenue sharing deal.
Obviously the devil is in the details of the deal, which we dont know. Obviously the devil is in the details. We dont know what the percentages are. We dont know how capable a salesforce Youtube has. We dont know what percentage of revenue their streaming costs take up (remember, streaming costs per bit dont go down as volume goes up, they go up at very high volume levels) and we dont know just how diligent they are going to have to be for Warner MG to recognize WMG copyrights.
Think about it. In order for them to recognize a copyright violation in the bar mitvah tape, they first have to identify any and all songs, then they have apply that to a list of WMG songs. That aint going to be cheap to do.
Does this make a difference in my thinking ? Not at all. In fact its reminds me of when Bertelsman cut a deal with Napster. It sure sounded nice, but didnt amount to much of anything. Kudos to WMG for giving them a chance and probably leveraging the hell out of Youtubes traffic, but this is just one copyright owner out of the thousands, if not tens of thousands owning copyrights that are most likely being illegally used on Youtube.
The Coming Dramatic Decline of Youtube
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(Page 1)2. Nobody is going to sue youtube. All the copyright holder has to do is complain to youtube and they take down the copyrighted material.
A clever policy which relives them of the chore of monitoring content . . . putting chore upon the copyright holder.
Posted at 12:43AM on Sep 18th 2006 by Norm Gregory
4. YouTube will fall under the same ruling that the P2P networks have in recent months. YouTube has less ground to stand on than the P2P networks in that they actually host the video in question, its on their servers, whereas P2P networks just bridge users together whom are looking for similar content, no data is stored on the network's servers.
Mark is right on this one (as if he's really ever wrong).
Posted at 12:58AM on Sep 18th 2006 by Sean Foushee
5. I guess time will tell if you are right or not Mark. Personally I am rooting for YouTube to make it.
Posted at 1:03AM on Sep 18th 2006 by Antonio Howell
6. Because YouTube does have a DMCA takedown policy in place, most legal experts have opined that YouTube, as a hosting service, is not liable for copyright infringement of its users unless the copyright owner does not ask them to take it down. They have statutory protection from liability of their users' activities (under the DMCA, I believe). Any lawyers who know, feel free to clarify/correct as necessary.
Of course, just because YouTube would win a case does not mean that it couldn't be sued, and defending such cases could become expensive.
You also bring up a good point about copyrighted material being illegally used. It's technically illegal for me to sing "Happy Birthday" to my mom and then post said video on Youtube (or anywhere on the internet, for that matter) without a license with "Happy Birthday"'s copyright owner. Of course, this is ridiculous, and an example of how the specifics of intellectual property law have not appropriately adapted to the changes in today's society. Like the Sony Betamax in the 1970's, Youtube is a technology which facilitates copyright infringement as interpreted by current copyright law, but should be recognized for its value for creating new markets that will benefit even the original copyright owners, and copyright law should evolve to better fit the information age. After all, the purpose of IP law as spelled out in our Constitution is to promote the progress of science and the arts, not to squeeze the maximum profit for the rights owner at the expense of society.
7. If you remove the hyperized hyperbole from your argument, the fact...I said fact...remains that YouTube is not primarily copyright violating content. If every video that actually - note I said actually, not "potentially" - violated copyright was removed, there would still be millions of videos to watch and embed and have fun with.
The real reason YouTube may die is that bandwidth bill. They still haven't figured out a way to monetize it.
8. I've often wondered about the presence of copyrighted material that I've seen on YouTube. I've seen some uploads that appeared to be posted by the ZDNet and other copyright holders. As you mentioned, "Bad Day" has undoubtedly been used without proper compensation more than its share. One question might be whether pursuing whatever settlement could be had for these violations outweighs the benefit to the copyright holder of having millions of people potentially exposed to the snippets.
(Especially given that this is not lost revenue for use that would have otherwise been paid for. If the user would have found another song to use, or woukd have chosen not to post a video because of the licensing rather than have paid for the rights if presented with that business model, it's not fair to count that as lost revenue.
Given the complexity of music licensing, unless that model were introduced (again, the industry is behind the technology) and ignored, it seems a stretch to call in the FBI again on this one.
What should be very interesting to watch is what derivative works are introduced from YouTube content. While the T&Cs are clear in communicating the expectation that all copyright issues are the responsibility of the poster, they also explain that YouTube has virtually unlimited free use of the posted content without the obligation to compensate the poster of the content.
According to the T&Cs, " by submitting the User Submissions to YouTube, you hereby grant YouTube a worldwide, non-exclusive, royalty-free, sublicenseable and transferable license to use, reproduce, distribute, prepare derivative works of, display, and perform the User Submissions in connection with the YouTube Website and YouTube's (and its successor's) business, including without limitation for promoting and redistributing part or all of the YouTube Website (and derivative works thereof) in any media formats and through any media channels."
Compiling a huge library of content for distribution in other media, similar to its recent projects with MTv may be one of the ways that we will see youtube profit while balancing the concerns of artists while still meeting the customer demand for a free and easy to use service that lets them share videos.
Here's a radical thought: If copyright holders police the use of their own content themselves, they could make the individual business decisions about the use of their work for themselves. The likely scenario then could be that the users end up being the ones without a share of the profit from those "derivative works."
Best regards,
Susan
BTW, I saw The Jacket last night. Very impressive!
Susan :^)
Posted at 1:33AM on Sep 18th 2006 by Susan F. Heywood
9. http://sdpurtill.wordpress.com/2006/09/18/why-cuban-is-right-about-youtube/
Google is going to win this one.
Posted at 1:37AM on Sep 18th 2006 by Sam Purtill
11. Mark,
One of the reasons why Youtube caught on so quickly is that their videos play VERY quickly. It's like night and day between youtube videos and those on mtv overdrive, cbs, aol, etc. Most people don't have the patience or the know how to figure out how to get videos to work. Youtube made it obscenely easy.
I don't think the site is going to be around in it's current form in the next few years. There's too many copyrighted videos, its growing too fast, there's alot of money at stake and the old line media companies are going to continue to think to themselves..(but we're losing money here!).
I'm suprised there's still so much copyrighted material on there. The rules can be changed. Some of these clips have more views than on cable. How long can that last? As the TV world continues to fracture and splinter into a thousand pieces, some executive is going to say...."what a minute! What about that #$& youtube?!? They're ruining this channel..."
And there goes the party....
Posted at 1:56AM on Sep 18th 2006 by John
12. Mark, you're just jealous and angry that YOU didn't think of YouTube. With all your billions and your experience in broadcasting over the Internets, you missed the opportunity of a lifetime to add a few more billion to your name and you just can't stand it can you Mark? Hmmmmmmm?
But, I'll do you a favour Mark (probably the last time I do a billionaire a favour, so I hope you read the responses to your "blog") and explain why YouTube is not getting sued. It hasn't been sued because it's a great advertising tool and a great way to build brand identity and differentiation, and a great way to get to get fans of your product to invest more in the product and evangelize your product. No ones going to sit there and build a video playlist and minimize the screen to hear songs because:
a) the quality ain't there
b) you can get high quality versions of those songs elsewhere for free (pirates) or for minimal cash (iTunes)
What will happen is that you'll hear a cool song in a fan video and check it out and get the album. Which I have done twice already! Yes, that's right, YouTube videos featured cool songs that I tracked down and purchased. And that Mark, is why YouTube has not been sued and why you are fuming.
Posted at 1:59AM on Sep 18th 2006 by Jacob
13. Mark's assessment is spot on. The copyright issue may be one of the primary reasons that no major media company has purchased YouTube. If News Corp. purchased YouTube, for example, do you think a competitor like Viacom (which owns MTV), would not seize the opportunity to sue? It would be costly for both companies, but the fear that it could happen is probably one of the reasons nobody has acquired YouTube. Instead, media companies seem to be building their own online video services (see AOL Uncut). And why not? They already own huge content catalogs and the YouTube technology is a commodity that can be duplicated very cheaply. How would they justify to their shareholders spending $1 billion on something that could be cloned for less than $100,000 and that introduces the company to potentially huge legal liabilities?
The DCMA is not as black and white as some posters here have stated. In the Napster case, a lot hinged on whether or not the court believed that there were enough non-infringing uses of the service. The court was of the belief that Napster was filled with infringing content and non-infringing content was minimal. It also wanted Napster to implement other technology that would be more proactive in preventing abuse.
YouTube, in my opinion, certainly has non-infringing uses and might eventually successfully defend a lawsuit, but this ignores the real point, which is that a lawsuit will force YouTube to spend millions of dollars on legal fees. In the American legal system, "justice" doesn't always prevail. The party that has the financial resources to bleed the other party dry typically does.
YouTube is already burning through money providing hosting/bandwidth free of charge. If one or two major media companies sue them, it could put them out of business. Do you think there will be any VCs willing to invest millions of dollars in YouTube at what is surely an outrageous valuation, knowing that those millions of dollars will go straight into the pockets of attorneys? At that point the business loses all appeal to investors and potential acquirers and you know the rest.
14. Hey... just a question here, but how is http://video.google.com any different?
It would seem that Sergey and Larry have left the door wide open to litigation with this too.
What about Google Current TV and their View Created Content?
Posted at 3:20AM on Sep 18th 2006 by Mark
15. Legal action will come the way to Youtube just like it did with Napster, but their brand links viewing video’s on the Web commonplace, and its becoming stronger as each day goes by. I would suspect the new media companies who own the writes to these videos will figure out a way to purchase Youtube, instead of killing it off as was did with Napster. When Bertelsmann eventually bought Napster the brand was being tarnished and new file sharing programs came about. Mark, Youtube’s brand and service will not just disappear!
Posted at 4:11AM on Sep 18th 2006 by Andrew Beckman
16. Interesting thoughts on youtube.
What do you think about the Chinese youtube Clone site, toodou.com? I imagine that site will have way more traffic than youtube eventually.
And far less restrictions.
Posted at 4:11AM on Sep 18th 2006 by The Redneck
17. Hey Mark
I just read the following article about how Warner will actually be sending its own videos through YouTube, instead of taking legal actions. Apparently this also includes licencing their music for any homemade videos. If this is indeed true, then it will be a fantastic first step in the right direction. Maybe the record and movie studios are finally learning...
http://news.yahoo.com/s/ap/20060918/ap_on_hi_te/youtube_warner_music
Posted at 4:22AM on Sep 18th 2006 by Thomas
18. I just read that article too Thomas. It does make the sueing argument a much weaker one. I think we can pretty much guarentee YouTube.com will get sued by someone, and probably more than once. But I dont see it bringing them down.
Quote from Commentor Drama 2.0: "How would they justify to their shareholders spending $1 billion on something that could be cloned for less than $100,000 and that introduces the company to potentially huge legal liabilities?"
The answer is simple, they as of today the 14th biggest site on the internet (millions of users everyday). Just Reproducing the technology will not get that sort of branding and popularity.
The cost of bandwidth and YouTube showing no way to monetize on the traffic just yet is still the biggest issue.
But lets not remember when Google first started they had no proper idea on how to monetize on their technology.
19. More on Warner licensing music in YouTube videos
http://www.techcrunch.com/2006/09/17/the-carbonite-solution-to-online-backups/#comments
Posted at 7:41AM on Sep 18th 2006 by Mike Radigan
20. Wrong URL, the correct one is:
http://www.techcrunch.com/2006/09/17/warner-music-to-license-music-to-youtube/
Sorry
Posted at 7:44AM on Sep 18th 2006 by Mike Radigan
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1. Mark, I'm not exactly sure about the DMCA act but doesn't the law shift the burden of legality/illegality on the users. I see Youtube on the same line as Ebay. They both have illegal content on them but any lawsuits or charges are wholly shifted to the user.
Posted at 11:54PM on Sep 17th 2006 by Chelsea Brandon