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TECHNOLOGY BREAKDOWN: YouTube – The Promise and Peril Of Online Video
*In the past, I have covered a number of ventures involved in developing online video distribution. For the most part, those columns have dealt with distribution of movies, but current trends show that the greater profit potential resides not in the distribution of feature length video content, but in the distribution of video shorts and clips which rarely run more than 10 minutes. If you look at the most popular sources of video content, easily the most popular are the user generated content sites (such as YouTube and MySpace) followed by various mainstream content producers which includes the likes of CNN, broadcast networks such as ABC and NBC, and wire services (Reuters). About a month ago, ESPN launched a new sports video service called ESPN360 (which switched over to a pay service yesterday, July 19, 2006). The increasing popularity of online video content has reached across demographics, as even Cartoon Network has joined the fray, launching its anime oriented toonamijetstream.com service this past weekend.
According to some reports, YouTube has come out on the top of the heap as the premier online source for video content, followed by Google and Yahoo video search services and many of the aforementioned news and information content producers. In his blog, Read/Write Web, Richard MacManus cites comScore ratings from May 2006 which show that the growth in traffic at YouTube nearly doubled, topping out at 12.6 million visitors, making the fifth amongst the “fastest growing web properties” across the sites tracked by comScore. In a June 22, 2006 Financial Times (FT) article, Mark Tutssel, worldwide chief creative officer for the Leo Burnett Agency (whose clients include McDonald's and General Motors) suggested that “YouTube has a greater reach among some US audiences than MTV”. According to the FT article, Mr. Tutssel's remarks were part of a speech given at the Cannes Lions Advertising Festival, where he urged marketers to allow consumer interaction with their brands. This is not necessarily a new revelation as I made similar comments in a keynote speech at the National Alliance of Market Developers (NAMD) conference two years ago, when podcasting was being hailed as “the next big thing”.
However, with most things concerning media and the internet, the nagging question of what to do about copyright again rears its ugly head. For all practical purposes, YouTube allows anyone to post content. In an ideal world, all of this content would be original content, but in reality some of the content posted on YouTube is copyrighted content. As pointed out by Yoshi Kusaki in his blog, The Journal of Catalytic Events (http://www.nslg.net/2006/06/youtube-popularity-has-tremendous.html), on YouTube you can watch popular TV shows, music videos as well as original content. In a June 27, 2006 Washington Post report, NBC executives demanded that YouTube remove certain copyrighted content (a Saturday Night Live skit called “Lazy Sunday”) from its site. YouTube responded, and NBC promptly reposted the content on their Web site. Recognizing the potential of YouTube's popularity, rather than reinventing the wheel, NBC than made a deal with YouTube that will result in cross promotion of the two media channels, as well as a vehicle for consumer interaction with the NBC brand in the form of a video contest where the winner's video will air in conjunction with the NBC series “The Office” -- exactly the kind of viral marketing suggested by The Leo Burnett Agency's Tutssel.
The YouTube/NBC deal marks another refreshing turn of events in the way that established media companies and internet media companies deal with each other(similar to deals made between BitTorrent and certain movie studios). While there are many in both the technology and media circles that look at the potential technology enabled piracy, it is beginning to look like cooler heads are beginning to prevail particularly at media companies, and rather than try to litigate potential new competitors out of business (as the RIAA did with the original Napster service), the potential for more profitable collaboration is being recognized.
Russell de Pina is a Principal with n2active, a technology consulting firm located in Houston, TX and Long Beach, CA. Russell can be reached by email at rdepina@n2active.com
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