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YouTube Growing ... Like Cancer?
PreacherTom writes "The success of YouTube has been staggering: they currently field 100 million videos per day and have attracted the attention of influential people like Bill Gates, who may be planning his own video hosting service. However, growth does not always equal profitability. Incorporation of ads risks their very base. If that were not enough, like Kazaa, they struggle with the Damocles' Sword of Litigation hanging over their head each day while bandwidth and server costs continue to rise. Is this phenomenal growth only rapidly killing our favorite video warehouse?" From the BusinessWeek article: "YouTube could easily alienate its users by overwhelming them with ads. And the startup has to figure out how to attract a broader group of marketers by filtering more for copyrighted or offensive videos and by creating more channels of similar content. Aware of the risks, YouTube co-founders Chad Hurley and Steve Chen are moving slowly to ramp up advertising. They have been wary of asking viewers to sit through a 30-second ad before a two- to three-minute clip. Instead, YouTube is developing new formats, like ones rolled out in August that let marketers build their own video channels or pay to place a video on YouTube's popular front page."
Is this phenomenal growth only rapidly killing our favorite video warehouse?"
Which one would that be? I don't rent videos. More likely it's a sign that people are more interested in content than quality. Many of the videos I've seen are very poor grade, while the few who really care about HD-DVD and Blu Ray squabble off in the corner.
YouTube could easily alienate its users by overwhelming them with ads.
This has in my experience been proven unfounded with Yahoo, Google, eBay and slashdot as examples. Bring on the ads.
[legal threat] hanging over their head
I expect this is due to the fact many videos are edits from television, easily spotted by the Sky or whatever logo in the corner.
pay to place a video on YouTube's popular front page."
Oh the vanity! People really do that??? If I want you to see my video I'll put it on my own site and mention it somewhere, maybe even slashdot and it it's interesting word will get around, if it's not, my ego won't be crushed. I will be pissed if those weasels at thinkgeek steal it for another merchandising product.
It is rather amusing to look back several years, if you remember a particular broadcast of some dot-commer telling someone at CBS(?) they would be burying the network, with whatever the heck it was this particular dot-commer had to offer over the budding internet. His company, IIRC went bust with a lot of others. Now look at the rabble scrabbling on YouTube, Google Video, their predecessors and whatever else will come along.
A feeling of having made the same mistake before: Deja Foobar
"YouTube could easily alienate its users by overwhelming them with ads. And the startup has to figure out how to attract a broader group of marketers by filtering more for copyrighted or offensive videos and by creating more channels of similar content."
YouTube could easily alienate its users who are mostly there to see the copyrighted and offensive videos to start with. Cleaning up YouTube might attract new marketers at the start but when the numbers decline what will YouTube have left? Sadly funny home video sites are a dime a dozen, YouTube has survived off its own lawlessness...kind of a catch 22 for them. I know I wouldnt want to own stock in them.
Cliff Claven
K.E.G. Party Chairman
Founding Leader of: Koncerned for Egalitarin Governance
Honestly, I don't get this web 2.0 "problem" of more adds = angry community.
It's no secret these massive community sites cost a lot of money, anyone expecting to get it for free should expect to be subjected to some form of advertising.
As long as they don't overwhelm the user with 1024x768 flash popups forcing you to watch a 15min coke add, I don't see the big risk of adding more advertising. WAKE up... money makes the internet tick.
All the social networking and video clips companies are just leading the charge to the next bust. The business model seems to be:
1) start "social" website
2) grow user base
3) ??
4) get bought out by Big Company X
5) profit!
6) site dies because it was lame to begin with
7) SUCKERS!!! - Precious Roy
Speak for yourself. Google Video is my favorite. It has a picture that scales to fill up unused space in my browser window. Plus, as a content creator, I can upload videos larger than 100MB which you can't do on YouTube. YouTube's limitation can make the quality of your video suffer if it is too long (20 minutes or more).
Slashdot: Failed Car Analogies. Amateur Lawyering. Anecdote Battles.
People look at the front page of youtube? That's news to me. Only time I ever see youtube is when a video's linked to by a blog mentioned on a slashdot web 2.0 competitor's website...
The problem with pay-for-play and other models is that there are big fees in the processing of the transaction. They should set up their own little financial system where people can transfer $5 from their bank account and then just directly transfer the money from there. ING Direct does this transfer for free for me, so I can't see there being any expense for them to do this on small payments. It'd require some overhead, but it'd be worth it as it would quickly infuse their site with a lot of cash. They could then just charge literally $0.01-$0.05 per transaction and make good money. That way, a $0.25 tip would earn several times more than it would on iTMS for the artists.
I'm not sure if such a legal argument is tenable and as I'm not a lawyer I'm not going to attempt one. But the overall scheme is that sharing clips of copyrighted work without profiting from its sale should be considered fair use. The majority of television networks understand that the sharing of clips amongst Internet sites in the long run benefits them. It promotes their show and their network. That is why there isn't much of an uproar about copyrighted content on youtube. Of course entire works should be barred.
The best education consists in immunizing people against systematic attempts at education. - Paul Feyerabend
I made some lovely graphs to illustrate this growth. These graphs use actual thumbnails from youtube as data points.
That's right - the medium is the message!
Charge a membership fee.
Now, before everyone goes bonkers, lets think about this critically. Servers, the power to run them, the buildings to house them, the people to keep them running, the people to write the code that makes the site run -- these are not free. If you don't have a huge wad of cash burning a hole in your bank, then you've got to find a source of funding, one which won't suddenly dry up and leave you with no way to run the show.
So charge for the service. Plumbers do it, lawyers do it (excessively it seems), hospitals do it... why not an Internet service? You pay your $20 a year and get free unlimited uploads. For those who don't like the model, you can have a free account, but we charge you a nickel for every upload. It might cut down on the megatons of crap that get uploaded, which would ease the strain on infrastructure and storage, generate constant revenue, which would ease money headaches, and generally improve things. And then, when YouTube gets so successful that it's ubiquitous, its CEO can embezzle huge amounts of money and leave the company broken while he sails away on his yacht.
GetOuttaMySpace - The Anti-Social Network
Someone needs to take the YouTube, et. al. concept and convert it into a P2P system that is easy to use. The p2p client could have a web interface to make it feel like current services and even use flash to show the videos downloaded locally.
They should think outside the box and put the ads after the video. Seriously, I wouldn't be surprised if it turns out that post-ads are viewed less frequently, but more effective enough when they are viewed to make up for the smaller eyeball share. Or they could just start their own cable channel.
Posted this in a related Fark thread, and I believe it still holds:
I think that, somewhat ironically, TotalFark shows how websites will survive in the future.
Even with the increase in ads and ad revenue, consumers are wisening up and finding ways to block them, and soon that well will go dry. So you can either overload your site with ads (which, ironically, means none of them get exposure since the overload causes the user to ignore them all), or you find another method of income.
The solution? Payable accounts. Take Fark as the main example. The majority of users enjoy a few hand-selected odd stories surrounded by ads. These ads are actually targeted towards the general Fark demographic, so they get a better CTR.
Then there's TotalFark. A verifiable anarchy of submitted stories, good, bad, and ugly. There are dozens of threads a day from people whining about the mose inane shit. Half of the links are repeats. Once a day we get a headline telling us to Google "miserable failure". But you know what?
A few thousand people pay $5/month to see that stuff, myself included. And all it really boils down to is getting more of the same stuff that the free people do.
This is how most internet sites will eventually turn. You have free stuff and then you have better stuff that costs money.
YouTube could offer high quality videos to paying customers. Offer the ability to help "distribute" content for indie producers. They pay a fee (probably more than those that just get the higher quality stuff), and they get content featured on pages, more options for uploading, and other goodies. YouTube could even offer a service where producers can have made-to-order DVDs of their work for purchase by regular users. YouTube and the producers would split the profits.
It would cost about $2 to make a custom DVD and package of something an hour or two hours long. Sell it for $5-$10 + S&H, and there you go.
They could get started by allowing uploaders to "share" their stuff, and a regular user could pick clips adding up to, say, an hours worth and pay $10 total for a DVD of all that. You would have an issue with people uploading shows and what not, but they would be able to either hire people full time to police copyrighted stuff or have a volunteer network, where the volunteers get free DVDs/free upgraded accounts for helping to report copyrighted stuff.
A lot of sites are already heading this way. LiveJournal has a pay service. You get a bunch of extra features, but mainly it's more of the same. MySpace will probably start locking some features behind a pay barrier, like streaming music, if ads don't make enough.
Some sites, like general news sites or just general all around sites will meet some problems with this, but they will just do this in bits and pieces rather than the entire site (Yahoo! and MSN have already started on this path, and I wouldn't be surprised if Google starts charging for some new extra goodies).
The way of the web, most media, will eventually decrease advertising as people are able to pick and choose what they want instead of being forced into packages.
Slashdot's own pay-for service is another example of the trend, though the features you get with it are lacking. (Sorry, guys, but seeing a dupe a bit eariler than someone else, removing ads, and getting a nice * next to my name is not really worth the money.)
Reminds me of the dot com boom.
You remember, right? Back in the days when you didn't need a business plan?
If YouTube hasn't already answered all these questions, then it truly learned nothing from the bust.
Let's see, go bankrupt or alienate some visitors.
Unless it's worth going bankrupt over and having a heck of a time getting financed for the next project, I'd say it's not a hard decision to risk losing some visitors in order to not go bankrupt. It's pretty pathetic when owners of a large site believe in the bandwidth fairy and fail to recognize they're the fairy. They're the ones paying for it.
It's time to either start putting some limits in place to get costs below revenue or to raise revenue. And if some visitors can't deal with it, then good riddence to them. You don't need a bunch of leechers driving you into bankruptsy. They obviously don't care about you so why worry about them?
Work Safe Porn
People often assume that something like YouTube, Palm, Tivo or whatever becomes big because someone had a unique insight. But, more commonly, it's simple cost and demand. Palm succeeded because chips and displays had gotten cheap enough to build a usable handheld. Tivo succeeded because harddisks and compression hardware had become cheap enough. For YouTube, bandwidth had become cheap enough to allow putting lots of video on-line and distributing it toe end users.
However, even if things have become cheap enough to start a business, they may still not be quite cheap enough to sustain it; if YouTube needs to make more in revenue than delivering video content costs them, and it's not clear that they can. And whether they can depends less on any brilliant insights they may have, and more on consumer behavior, ad revenues, broadband availability, and bandwidth costs.
Occasionally I'll get on YouTube's site and search for something or browse through the top viewed/rated. I might sit through one 15 or 30-second ad, but often I watch a video for less than 10 seconds anyway. I'm not going to watch a 15 sec ad for that.
Another time I see the videos is stumbling on some blog with them embedded. Usually there are several embedded in the blog. If the video or the description looks interesting I might give it 5-10 seconds to decide whether to watch it or click stop.
I don't think I am the only ytuber like that. With anything more than 1-2 seconds I'm just not going to watch it unless I *know* it's something I *really* want to see. And I can't imagine kids having more patience than me.
In the pilot for the old Max Headroom series, Network 23 pioneered a new type of advertising called "blipverts", fast, tightly-compressed burst of audio-visual information designed to prevent viewers from switching channels. Unfortunately, they had the side effect of making their "perpetual, more slothful viewers literally explode" but a similar idea could work here. YouTube doesn't have the advantage of conventional television, where people are watching a minimum 30 minute show, and will sit through a 30 second commercial spot in order to get back to what they really want. YouTube is offering what are essentially extremely short TV shows as their primary product with no real possibility of a commercial interlude. On the other hand, a two second advertisement presented at the beginning, if entertaining (or startling) enough, might be very effective yet not turn viewers off to the service itself.
Heck, if they want this to really work they should offer a plan that would reward submitters for presenting typical YouTube videos formatted as advertising for specific products. Those videos could then be shown to advertisers, who could pay to have the ones they like presented to regular YouTube viewers as advertising.
The higher the technology, the sharper that two-edged sword.
Google video does the same thing. Flash video actually rocks. Great compression, fast reliable player and widely supported (requires flash player 7). Flash video player is pretty much everything that realplayer et al aren't. And the fact is there isn't a good, open embedded movie format yet.
Sig removed because it was obnoxious
They are not the only way to garner revenue from a site. Look at eBay. It costs me nothing to browse the marketplace there and if I want to bid, my account is free. If I want to sell my wares there, it'll cost me. However, because of those fees, eBay's ads are not intrusive and barely noticable.
The whole allure to YouTube is the fact that it's free to watch. I REALLY can't stand going to a site to watch some linked video only to have to sit and wait for the ad to load first and then I have to wait for the ad to finish playing and then I still have to wait for the video I went there to see to finish loading. I'll click out of that browser window before the ad even finishes playing. It's a waste of time. What is even more infuriating is depending on server load, it can take forever to load that ad because that same ad is being loaded by millions of computers all trying to view different videos.
That is what kills these sites, these excessive ads and membership fees. I think eBay has one of the best revenue generating models out there. Whether they are profitable or not is in the hands of thier management. I think that if YouTube wants to stay on top of the game yet be attractive enough to get investors to infuse capital then they need to start looking at a fee based system subsidized by ads and maybe a premium, fee based viewer service.
Charging the average viewer to see an amateur video that quite possibly will suck more wind than a Hoover is a sure fire way to piss off your viewers. Bombarding them with ads just to make them wait and surf through the crap only to view that same amateur crap mentioned above will also alienate them. After all, most of us could live a full and healthy life without ever viewing little Jimmy's guitar rif video on YouTube. However, little Jimmy might just be dashed in his dreams of being a guitar hero if he can't get his video out on the internet. So charging the viewers who don't have the necessity to see the video will not work. They won't be as willing to pay for something they don't need. For that kind of pricing to work, you actually need a commodity that people want. I'm not going to pay to watch someone else's crap. If it's free for me to watch, I will gladly go for the lark. However, if I have a video that I just gotta have out there and YouTube is my place of choice to host it then charge me out the wazoo to get it up there. After all, that perceived need to gain acceptance of my internet based peers who will view my video comes pretty damn close to making hosting services for my video a commodity. Therefore flat fee pricing would work there.
Now if YouTube has issues with excessive bandwidth and offensive things being posted then, charging a nominal fee to post the videos will help squash those problems. It will help because people will be less likely to waste thier money posting crap and then linking to it from many other sites. The viewership will not likely drop off in that respect but might actually pick up because like what was said above about quality vs. massive content, you will gain viewers looking for quality viewing and not just massive amounts of content.
youtube is obviously the biggest player in this market right now. But Google, Microsoft & others all have the ability to fill that void, ad-free. If another company can provide the same service with no ads, how many viewers are going to stay just because its youtube? It may take some time for people to descover other sites. But I think eventually, the ads could push a lot of viewers away.
How many people have intentionally downloaded commercials?
I know I have.
If advertisers would be a little smarter about their advertising, and make their advertising work for the consumer, we wouldn't be so annoyed with commercials being crammed down our throats.
Commercials need to be funny, or perhaps provide you with a url to print a coupon for a product (that'd work online really well), or something. If commercials weren't so bloody annoying, things would be so much better.
Many commercials have annoyed me to the point that I boycott the product. Old Navy commercials are a great example. They're not entertaining, they're irritating. Whether its annoying jingles, bad actors, etc.
Yes, I realise you can't please everyone, but most commercials nowadays aren't pleasing anyone.
I, for one, know I wouldn't be bothered so much if commercials were just a little bit entertaining. I love the commercials Bell is currently running here using the two beavers. I intentionally watch those commercials when they come on because they're funny.
If company execs stop hiring idiots to do commercials, and make good, entertaining and/or informative, actually useful commercials, and put 5-10 second clips on the beginning of youtube movies, I'd happily sit through them. Alternatively, they could do as they said, and sell space on their main page for movies put there by advertisers. If they're actually entertaining, they will get watched.
Advertising, imnsho, isn't the evil, horrible thing, most of us make it out to be. Of course there's a limit on its obtrusiveness, but if they make good commercials targeted at the kind of people they're trying to sell to, then people wouldn't get so pissed off with them.
Going to show a video about a car? Run a BMW commercial before it.
Going to show a video about some guy opening a beer bottle using only a piece of paper? Show a beer commercial before it.
Just don't make them suck.
With the number of page views they get, adsense is already paying them close to 2 mill a month.
u be-is-already-wildly-profitable/
http://plentyoffish.wordpress.com/2006/08/24/yout
It would seem that if bandwidth is an issue, why not offload the bandwidth to the users? Distributed networking and file sharing has been around for a while now, a service like youtube could benefit greatly with a customized version of it. Instead of having the users get the movies directly from the site, use a distributed system similar to or even built upon bittorrent.
There are tons of smaller sites that are a hellofa lot more firendly. My favorite so far is Go Fish.
Last night on the local 1/2 hour news show there were 12.5 minutes of ads. Occasionally I tune in to a show like "CSI" or "Grey's Anatomy" and tune out about the second round of commercials. I can tolerate 2 or 3 ads, but 7-10? No Way! The content has to be exceptionally good for me to watch a commercial program these days. I think "Dancing with the Stars" may qualify, but they don't seem to have as many ads.
I never go to Yahoo! Music to watch videos anymore either, because I have to put up with the ads first. I want to select a bunch of videos, usually the same type (Jazz, Pop, etc.), without having my entertainment interrupted by ads.
The person who figures out the balance formula for paying for services with innocuous, acceptable advertising is going to make millions of people happy and become rich at the same time.
"The mind works quicker than you think!"
Back in the days when you didn't need a business plan?
YouTube is in a very different situation. The failures in the dot com gold rush were speculative web site concepts. "If we build this type of site, maybe we'll get a kabillion visitors and from there, we can do XYZ to make money from the traffic." People were investing in the possibility of these schemes being successful at attracting traffic.
YouTube has already crossed the traffic hurdle. They've built amazing brand awareness with NO ADVERTISING. In the failed dot com model, the idea was always to build awareness through massive traditional advertising campaigns.
If YouTube were to have its nuts removed over copyright violations (ala Napster), there are plenty of companies out there that would purchase it for the brand awareness they've already built. If Ted Turner were to get interested in pay-per-view internet video streaming, which might even have a very different offering than YouTube, buying YouTube for $100 million would be attractive because starting his own brand would require a similar investment in advertising to draw visitors.
That's why Bertleman bought Napster after it had been disembowled.
Seth
$5 / month hosted VPS on linux = awesome!
There is one benefit of growing. The larger you get, the lower infrastructure costs get per-user. The more bandwidth you order from a single provider, the better per-megabit costs they'll give you (You can bet they'll give somebody leasing a 10 GigE connection a way better deal than someone leasing a 100mbit FastE connection). The same applies to hardware, the larger your data storage requirements, the cheaper it gets. You can start taking advantage of things like Sun's 48-drive fileserver.
Yes, the "rule" applies less to hardware than bandwidth, but in general, the more money you've got to work with, the more you get for each dollar.