The real value of YouTube

I’ve spent the last couple of days with broadcasters, and as is often the case, the discussion eventually got around to YouTube. We all have our opinions about YouTube, don’t we? We marvel at their traffic, and yet we wonder how such a cultural phenomenon is ever going to make money. There’s also the legal ramifications of streaming copyrighted content, something Mark Cuban is currently harping on:

This so reminds me of the early days of Napster. They were the first to tell you it wasn’t illegal. They didn’t host anything but an index to link to all the illegal downloaders. YouTube doesn’t upload anything illegal and will take down whatever you ask them to. Sounds legit right ?

No, but that’s 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.

Cuban has a pretty significant dog in this fight in the Dallas Mavericks, and that’s evident in reading his diatribe. Alex Rowland (glad you’re back blogging again, Alex) disagrees with Cuban and makes a pretty insightful case that YouTube is vastly more than Napster could ever have hoped to be.
YouTube hosts and streams copyrighted content. No argument. But unlike the Napster days in which there was no evidence that this type of large scale ‘piracy’ actually helped distribution, today the signs are everywhere. Even the marketing departments of most major studios understand this when they upload their own copyrighted material to the site. But YouTube is, in its essence, a massive syndication platform for content. YouTube is not about monetizing this content directly; it’s about getting tons of people to watch a video clip at the lowest cost possible.

This type of massive low-cost syndication of low-quality streamed content is less than a year away from becoming the de facto launch strategy of professional and amateur content alike. While the lawyers may not understand this yet, the marketing guys certainly do. When content owners begin taking down copyrighted materials from YouTube, they become less culturally relevant. Has Jon Stewart’s relevance and consequent profitability to the studio declined as a result of his frequent free appearances on YouTube?

Alex goes on to note that YouTube is where cultural memes are born and raised, which makes it a very valuable place to be.

I think this analysis is spot on and something all of us in the broadcasting world need to accept. The “how they make money” question pales in comparison to how they are — and more importantly will be — making money for others, and that’s where the real value of this kind of portal exists. The laws of the land are there to protect the institutions that form the status quo, but what we’re witnessing is a revolution — JD Lasica’s “personal media revolution” — and it will ultimately result in new laws to serve the people. YouTube is in many ways a visible battleground in the conflict between modernism and postmodernism, and just as the printing press proved the turning point between premodernism and modernism, YouTube stands in the gap between the people and “the church” of modern times.

We need to be exploring what we can learn from YouTube, not trying to figure out how to shut it down.

Comments

  1. Agreed — YouTube will allow distribution of media to flourish, both amateur and professional, and is close to becoming the de facto method of premiering new content — HOWEVER, I wonder what are the risks of allowing all this media to flow through one entity? Already the YouTube featured page, capable of boosting a video’s views into the hundreds of thousands, seems rather arbitrary and political in it’s choices. Do we really want to trust one media outlet with this much power?

  2. thedetroitchannel says

    ben, this may go to what terry was saying about “what can we learn” from youtube’s success.

    some entreprenuer is going to figure out how to do something on a local level or a category level that can replicate the experience provided by youtube without the noise.

    if it works locally, it’ll probably work anywhere.

    you’d have a far more defined audience than just “THE WORLD”, something advertisers could then get their hands around.

  3. When CEOs can’t figure out how to deliver growth on their own, investment bankers and shareholders nudge them along to consider big ticket acquisitions.

    Other warning signs of disruption which may apply in the media sector:

    * Customers stop appreciating and paying for innovations they used to value;
    * Strange niche suppliers start gaining share;
    * Tried and true management techniques fail;
    * A growth gap emerges between shareholder expectations and what management thinks it can deliver;

    More at:
    http://www.ondisruption.com/my_weblog/2006/09/media_ma_warnin.html

  4. Good stuff, Michael. Thanks for the link. I continue to encounter disbelief within incumbent media about the disruptive innovations that are about to eat their lunch.

    And so it goes…

  5. Ben, I think that YouTube is gaining enough power to arbitrarily asign distribution power to certain videos through promotion to their front page. However, I think this control is effectively checked by the ability for anyone to take content from the bowels of YouTube and to promote it to their own front page (or Digg, etc.) through the embed function. Sure, the YouTube guys are becoming cultural lightningrods, but that will even be more the case in the postmodern media world that Terry describes.

    I also just wanted to clarify one thing. I said that in the days of ‘Napster’ it wasn’t clear that ‘piracy’ helped distribution and that is not actually correct. What I meant to say is that it wasn’t evident that this increased distribution would benefit the distribution of the PAID version of the asset as well. My bad.

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