Riddle me this copyright gurus…

First, i have nothing against youtube. I hope they do just fine. Whether they survive or not doesnt affect me one tiny bit.

As someone who worked hard AGAINST the DMCA and provided financial support for legal efforts against the movie industry’s effort to overturn the BetaMax ruling. Anyone who has read anything I have written, knows I think copy protection schemes are a waste of money and far too much money is wasted trying to police and implement copyright laws. This coming from someone who has a lot of money invested in content.

I wrote the first blog entry simply because I thought the discussion of how and why Youtube had achieved its level of traffic where others had not was interesting. As many different copyright discussions as I have had since 1995, the one constant was that big copyright owners want control. It was never a matter of if they would try to assert themselves to gain control of their content, it was always just a question of how and when.

GIven Youtube’s meteoric rise, I thought it was an interesting question to ask, “Is there anything really unique about Youtube?”. The answer was yes. They were the first site I had seen that had any traffic at all that was going to risk it all by saying that since users did the uploading and all they were doing is hosting the files, they fell within safe harbor rulings of the DMCA. All of this sounds really really nice when its a couple people discussing it on their blogs or in the comments or at a conference. In reality, the user implications are damn scary.

This is from the DMCA

The safe harbor provisions permit a copyright owner to subpoena the identity of the individual allegedly responsible for the infringing activities. [512(h)] Such a subpoena is granted on the condition that the information about the individual’s identity will only be used in relation to the protection of the intellectual property rights of the copyright owner. [512(h)(2)(C)]

Another section goes on say

The safe harbor provisions require the service provider to include in its copyright infringement policies a termination policy that results in individuals who repeatedly infringe copyrighted material being removed from the service provider networks. [512(i)(1)(A)] This termination policy must be made public in the terms of use that the service provider includes in its contracts or on its web site.

Thats right sports fans. If they know who you are, and you post something that doesnt belong to you, they might have to give you up.

And if you are are the guy/girl that posts the NFL, Daily Show, Letterman highlights every night, and any of the owners of those items decide they dont want to be on youtube, then there is a good chance that your days on youtube are numbered.

Now I realize you can add any number of profiles, today. But thats the thing about having all these content owners come after youtube, at some point users get sick of getting kicked off, and of all the hassles that could be associated with dealing with youtube. One identity gets revealed and its front page news.

To some this might not be a big deal, but one of the great things of youtube is how easy it is. If it stops being easy, and the hassles go up. The value and breadth of content declines as do the number of users.

Now all this so far presumes that Youtube qualifies for the safe harbor act. Personally, and Im not a lawyer, I dont think they do. To qualify, as I read it. They arent allowed to change the original file they host in any way. Well Youtube re encodes the video into the FLV format. On top of that, it progressive DOWNLOADS the content to your hard drive (thereby saving a ton on bandwidth for replays). So these issues may be moot, but if they are Youtube is going to be in a heap of hurt.

But for the sake of example, lets go with Youtube being able to qualify for the DMCA Safe Harbor. Lets presume that there isnt going to be a rush to turn over user names and information or kick off anyone who has repetively uploaded any copyrighted materials that has received takedown notices.

The two things I dont think will ever change is that big media companies want to control where there is content is seen, and how their content is monetized. They have absolutely no problem suing to gain that control or sicking the MPAA or RIAA or both on anyone or thing that threatens that control

So rather than guess about Youtubes future, lets think about the implications if Youtube can go about doing their business as is. That anyone can upload anything they want and the worst that could happen is that the copyright owner sends a notice to Youtube that they own the copyright of a video and they want it removed, and then Youtube removes it.

So then what ? Does anyone really think that the big media companies will say “oh its ok, we like youtube..Lets just move on. ” ?

Of course not. There wont just be one Youtube, there will be millions. Youtube limits the size of the uploaded video. But thats their choice, probably for cost and performance reasons. Youtube2 wont necessarily do that. So if its legal to upload 100mb of copyrighted materials, then it will be legal to upload 100gb of copyrighted material. Which means any movie, any anything. Convince everyone you know to upload every movie or video they ever bought to Youtube2 and then just offer the video from your blog. Or better yet, tell all your friends to upload those movies and videos on Youtube2, then go to your website and just use the html code to present all those movies. It will be a buffet of all the movies you can watch , and Youtube2 pays the cost of bandwidth and deals with all the takedown notices.

Now that will be a great business.

Now some might say that it wont work that way because YoutubeX will do a licensing deal for the video/movies. Dream on. Ask Cablevision what happened when they simply tried to move the DVR from the home to their central servers. Ask anyone who has tried to license a wide range of products how hard it is just to find all the people that own the rights to certain materials.

But wait, there is more. For the last 8 years the battle has been between copyright owners, the people who want to download that content for free. and the services that enable that function. What Youtube could go down in history for is extending the battle to the world of uploading to hosting services. Little Johnny can get sued by the RIAA or potentially the MPAA for making music or movies available from his hard drive. But if Johnny uploads that to a hosting service that is claiming the DMCA safe harbor, Johnny is in the clear.

Forget Youtube, a site could come along EverythingTube.com. Make it primarily for sharing independent artists music videos and user generated video content, a “bigger, better Youtube” if you will. Just offer an encoder that mixes mp3 audio with any video or any series of pictures Then create profiles like Beatleswhitealbum and upload the white album, etc, etc. If Youtube can do what its doing, why not EverythingTube ?

Move the risk from everybody’s hard drive on to the copyright owners who would have to sort through tens of millions of profiles and videos to find out what belongs to them. It would be impossible to police. THink someone might get mad and try to change the DMCA ?

Bottom line is that ri
ght now everything seems really nice. One site with tons of traffic, tons of videos, tons of infringing and non infringing videos. A really cool library where you can find tons of stuff. All the excitement of discovery that we all felt when we first started using Napster.

The problem is that the web is a cockroach farm. There is never just one cockroach and there is never just one site that will compete in a certain area . THere are many video hosting sites now and to come that will look at what youtube is doing and try to oneup them. In a copyright world where lawsuits are more prevalent than even Dwayne Wade free throws in the finals, the lawsuits will come.If the lawsuits dont work, then they will give the politicians in DC lots and lots of money to get the DMCA changed, again.

And one last time I will touch on the economics of streaming. Youtube streams to their user and allows the user to retain the file. But they are still streaming huge quantities of bandwidth. The thing about streamed media is that it doesnt get less expensive the more you stream. When you get into doing terabytes of streams per day, your cost per bit tends to go up as volume increases because of all the incremental overhead associated with delivery of that video. From servers to routers to people to software licenses to maintenance to backup and redundancy etc, etc. the costs ad up in a big way, Delivering video is a whole lot more expensive than delivery of text, but the CPMs for any advertising have to compete with people selling text based ads. Its going to be interesting to see how it all turns out.

I made a prediction, but that doesnt mean I dont like ’em

48 thoughts on “Riddle me this copyright gurus…

  1. Has anyone mentioned the WIPO?

    With the new WIPO rules the first broadcaster owns the copyright (thats right, you make a film. Its get broadcast on the BBc, and if PBS want to broadcast it, you have to ask the BBC for permission).

    Broadcastng includes podcasting or vodcasting on the internet. I.e. YouTube shows it, they own it.

    This could mean that leaked material broadcast on YouTube becomes property of YouTube. I will ask if you could confirm this but despite sounding impossible, this seems to be the case.

    Of course I could be mosreading the proposed laws.

    Comment by Will -

  2. Number 46. Mark Burton Nice article I enjoyed reading that… Good find.

    Well… well… well it looks like someone else can see exactly what Ive been talking about – http://news.yahoo.com/s/ap/20061006/ap_on_bi_ge/google_youtube;_ylt=AhSimCO7hS7EnjCSnt5FyhGs0NUE;_ylu=X3oDMTA3b2NibDltBHNlYwM3MTY

    Google is now it talks to buy Youtube How cool is that, now there are some real smart people working over there at Google. I think this will be an amazing Deal and an even better partnership

    Mark Cuban I guess your getting old. (lol that means laughing out loud) You probably think its a bad idea:)

    Comment by Crazyglues -

  3. Fred Wilson’s blog A VC puts forward an interesting hyperthetical advertising revenue model for YouTube that’s worth a look, especially if you are the CEO of a big copyright owner that wants to control its content:


    On the back of these numbers a content licencing deal looks an attractive proposition that would help all parties involved including users.

    Comment by Mark Burton -

  4. Mark Z. First let me say I found your response to be very interesting. You rise some very good points as most good arguments do However I of course would have to beg to differ, and not because you points are not valid but just because I can name five content driven videos on youtube that I find to be very entertaining to watch and have no copyright issues whatsoever. These are all usernames just do a search and you can find them – for one LUCYinLA story of a woman who went to LA to chase her dream of being an actress. watchman55 pure genius, the watchman is a guy making jokes about comments to videos on youtube but its done so well it could be a TV show. The list goes on and on LisaNova, TheWhineKone, Brookers, xgobobeanx, my point being that it is possible for people to make content that poses no copyright issue.

    Lets be clear about something, the law says that you must provide a way for the copyright holder to inform you and remove content once notified by the copyright holder, which youtube does right away. (and something Bit torrent and napster, limewire, etc all never did or tried to do not really anyway.) They have even begun using filters to weed out keywords and are working with big studios to insure a fair playing field environment.

    Lets also be clear about this Napster was indeed illegal but it did feed an important need that the public seem to have about getting music online, the big music companies could have easily bought the company and turned it into a pay service like Apples itunes but instead they choose to go against the grain and fight it. We all know how well that turned out.

    Well today I hope studio companies are smarter then that, I hope these companies understand that this is the future and in the future it pays to focus you fights on things that make sense, going after someones video because they played a copyrighted song in the background is just stupid, especially when that song becomes more popular and makes people want to buy it because they heard it and liked it in a particular video blog.

    Today NBC has its own user profile on youtube where they have begun reposting their own TV show content. The world is changing and it makes sense to work out something that works for everyone.

    Warnerbros has made a deal with youtube too, http://publications.mediapost.com/index.cfm?fuseaction=Articles.showArticle&art_aid=48332&art_type=13
    And Im sure others will follow, people say it cant be done but here it is being done right before your eyes.

    So lets focus on the real value of youtube, it controls the focus of a huge amount of viewers and in the internet world thats everything, so why do you want to fight something that can be bigger then we ever dreamed? Why do you want to go against the changing future, against technology?

    They use to say the radio would kill music sales. I still laugh at the thought of that idea. Its funny but radio actually made music bigger then it ever was. Bigger then the music companies every dreamed of.

    So are you that person standing at the top of the roof screaming how it cant work, and how its too crazy, and it will never happen. Because if you are, last call at the bar was awhile ago and you really need to stop drinking and pull up your pants and come back inside now, I hope thats not you. (Laughing out loud) seriously I hope not, because you sound crazy right now. Also

    Because your wrong, and if you think about it, companies will learn how to play nice, not because they want to but because its in their best interest. And it will make the whole thing better as we go forward into the future. Think outside the box. Youtube is the future and fighting youtube would just make someone else youtube, just like fighting napstar made limewire.

    The future wont wait for you to figure it out that its here, because the future is happening in real time.

    Youtube is a goldmine period, and if you cant see that cancel your subscription to the wall street journal because trust me you dont need it

    And to Mark Cuban I think youre a genius and if youre telling me you really cant see this then you need to call me because that just amazes me, I really need to hear you say it.. Email me and Ill send you my cell number…

    Comment by Crazyglues -

  5. YouTube better knows wat to do.

    Comment by Haroon naseem -

  6. oh, come on, these moneysacks are pissing off every single normal person with their will to get rent for information, in the maximum possible size! I think, if they could, they’d make a law for them to be paid for every time you listen to a song, not for the right to do it as much as you wish at home…

    Comment by hallo -

  7. Crazyglues, apparently you completely miss the point with YouTube. Yes, they have tons of traffic. Yes, they the people love them right now. If it was YouTubes own content, they could easily monetize.

    But you seem to neglect the reason for the love and the traffic.

    The main reason is – they built the love and the traffic WITH STOLEN CONTENT. Let’s call it that way. People steal some copyright protected work and put it to a museum where everybody can watch it for free. Nevermind the copyright holders that are gathering with pitchforks at the back entrance of the museum, uhh, I see some guns as well there.

    But seriously, their core problem is copyright, copyright, copyright. People come there to see funny clips from movies, TV shows, or some weirdo adult stuff. The shaky and remarkably unfunny 10fps mobile phone videos of teenagers very quickly lose appeal once you have seen a few of them.

    So people turn to quality content, which comes from quality producers, using studios, pro equipment and real production teams. These cost real $$$, and so they want to see $$$ for that content. And that’s why they get upset about YouTube.

    The second YouTube earns real money, they will be sued to hell over copyright infringement. The second they start to introduce pre-roll or post-roll advertising, the guys with the pitchforks will show up. Unless they find some smart way to share the revenue. But still, I don’t think they can manage all this. There are too many copyright holders out there.

    I did a quick check the other day on three search terms: “Mercedes”, “Julia Roberts”, and “BMW”. I sorted the results by view count. Guess what? Between 50% and 80% of the views of the Top 20 videos for each query were coming from infringing material. That’s YT reality. You can try it for any other brand, movie title, or actor name. If you remove all the infringing stuff, the leftover is soooo unattractive, that noone will find YT attractive any longer.

    Comment by Mark Z. -

  8. Netflix on a hard drive is bupkis, but you are right on this one.

    Comment by Timir -

  9. What I find funny about this whole thing is, in the internet world you (Mark) of all people should know that youtube in the king and even if you don’t like the way it’s going no one can deny it’s dominance of the upload video world. People for years have talked about how MySpace will not remain king but somehow it still is and remains the big dog in the world of internet puppies.

    I love your take on it, but lets not be nave youtube is the leader of its domain space on the web and if you where really smart you would be putting in an offer to buy that company because right now is the sweet spot time. Shes a gold mine at 1.5 or 2.0 billion dollars, and if that seems high to you. Well lets just say people thought 580 million for MySpace was just crazy, but just take a guess at how much MySpace is worth today.
    Now its simple if you control the place that everyone comes to they you my friend are a genius. And youtube is huge, its true value will far exceed the 2.0 billion mark as the net continues to grow and in the right hands it is where you want to be when you want to run that 2 million dollar commercial that must be seen by at least 30 million viewers.
    Think about this many sites do this where you come to the site (Cnet & IGN.com for example) and an ad rolls before you continue on to the site. Well no other site can do it better then youtube will be able to do it. People are so in-love with youtube that if I had to wait a few minutes for the site to load while an ad played I wont care, or if it went to a subscription service, I would still be there. Why because it is the one, the one that does it right and the one that we all love already.
    I think Bill Gates said it best after he stole the Mac O.S. and called it windows when he told Steve Jobs it doesnt matter that your better, it only matters who is first.

    (its what people came to know as a computer O.S. and so what if Mac is better you already learned everything you know on a PC and in the end thats all that matters so most people stay on the PC because its what you know, its what you learned first.)

    Youtube is first and therefore it will remain the king unless someone reinvents the space and even then youtube will copy and advance and remain the king.

    If you want to know where the net is headed its headed towards youtube-tv where you will watch TV from your PC using your youtube subscription account. Now has youtube made that yet? No, but for the person who buys it what an amazing move, a chance to change the internet world as we know it. And he who controls the internet makes all the money.

    So Mark if I was you I would be putting together all your investors you can find and make bid for the big dog on the block, I got 50,000 for you, sorry its so small but thats all I got I dont own a big basketball team or nothing like that. But dont worry I know someone who will put up the other billion you will need.

    (But seriously I think if anyone can do it, you can, youre in the perfect position to do it just right since you already have an HDTV network that you can easily integrate into the site.)
    I hope you give it some serious thought because its a good move for you. I could just see the headlines now Mark Cuban buys youtube for what he says is a wholesale price. I’ll let you guess what number that price is.

    Comment by Crazyglues -

  10. I tend to agree that a subcription model would definitely be a good option for revenue. Maybe allowing the subscribers to stream higher quality videos. They need to strike a happy medium for the bottom line and their viewers.


    Comment by maddux sports -

  11. According to YouTubes own press release of July 17, 2006, the company serves 100 million videos per day and served 2.5 billion videos to nearly 20 million unique visitors last June. YouTubes copyright infringement notice procedures appear to comply with the Digital Millennium Copyright Act, but the amount of infringing material on YouTube allegedly far exceeds the ability of any copyright owner (or any monitoring system YouTube may have in place) to stop the infringement in a reasonably prompt and thorough manner. Indeed, if even just 1 in 10,000 videos served (or .01%) infringes on a copyright, that would still be 10,000 videos per day (or about 7 per minute).

    While the YouTube user agreement (a) prohibits users from posting material to which they do not have rights and (b) requires users to indemnify YouTube for any breach of its user agreement, it would be financially unfeasible to enforce that provision against the many thousands of users from whom YouTube allegedly could seek indemnification (not to mention the fact that virtually all of those users will probably be judgment-proof defendants with very shallow pockets).So the dispositive issue is whether it is sufficient for YouTube to comply with the DMCA merely in a technical/formal way that still results in a large amount of de facto infringement, or whether there is a more onerous, affirmative obligation to comply with the spirit of the law enough to ensure that virtually no infringement takes place, even if this would require YouTube to implement substantial changes to its business model and/or web site.

    If YouTube is found liable for contributory infringement for having knowingly failed to remove thousands of infringing videos, it could face a massive judgment which even without treble, punitive damages would likely force YouTube into bankruptcy, given the large numbers involved. On the other hand, if the deciding court finds some way to apply a more forgiving standard (perhaps on the unlikely theory that a more stringent standard is impracticable, harmful to budding artists, and/or bad for free speech), the site could go on to live another day and find the pot of gold at the end of its video-sharing rainbow. The multi-million (or billion?) dollar question, of course, is whether investors are willing to gamble on the outcome of the serious legal issues raised by YouTubes current business model. Another problem is that merely defending itself against so many lawsuits could bankrupt the company, even if YouTube could ultimately prevail on the merits, in each individual suit brought against it. At the moment, YouTubes legal future does not look particularly bright. According to a report last week, Universal Music Groups talks with YouTube Inc. have deteriorated and the recording giant is set to file a copyright infringement lawsuit against the San Mateo-based company if no agreement is reached by the end of the month. (see http://www.mercurynews.com/mld/mercurynews/news/local/states/california/northern_california/15520315.htm)

    If YouTube does in fact get forced into bankruptcy, it is unlikely that other sites based on a similar business model will last very long. Google Video has too much to lose to risk being sued for not making any changes needed to bring it into compliance with whatever ruling shuts down YouTube. And any remaining sites that dare to defy such a ruling will face a massive legal attack from Hollywood studios and other major copyright holders whose rights have been infringed under the YouTube ruling.

    Comment by Gil Lahav -

  12. “YouTube should just move their entire business to Thailand and ignore American copyright laws. If the Thai government decides to enforce copyright laws, they’ll change their mind with bribes.”

    Ha ha ha. Interesting point above.
    Mark, great blog entry! I do hope YouTube survives because I’m sick of big media companies shoving crap down our throats. The last bastion of freedom is the Internet, and companies/sites like YouTube, VSocial, Revver, Google Video, Blip.tv et al are giving end users the ability to showcase their talents and provide a DIFFERENT perspective on THINGS (issues, etc.). And that my friend is PRICELESS. The doors have been opened, Pandora’s box of unlimited creativity has been unleashed.

    Go Mavs go!!

    Comment by MaxTheITpro -

  13. There was an article online talking about how Youtube is paying millions of dollars a month to host and transmit all of the video on its site. It won’t last long. They don’t have a lot of cash right now. They need a huge amount of capital to keep going. This is aside from the copyright issues. And contrary to some fo the comments on this blog, copyrights help foster innovation, the free market, and capitalism. They should not be ignored or thrown aside.

    Comment by girls basketball -

  14. Towards the end, that part on Wade was funny!

    Really, the copyright issues are a big problem…and let’s be honest, big companies are going to fight this when they notice a diversion of viewship and a corresponding loss in advertising.

    Case in point, if you can get “the office” commercial free on youtube, you’ll go watch it on the internet; especially if you’re working late, behind on your episodes, and can’t get home in time to TIVO it. The problem? You don’t watch it on TV and the broadcaster loses the ad revenues. (now I know how similar this gets to TIVO law, but …).

    Another case in point, rss feed spam blogs. These guys aggregate posts from several popular and similarly niche blogs and post the entirety (pics, text, etc.) on their blog. They put a small attribution at the bottom, steal bandwidth from the original blogger, and divert traffic. Search engines start to index these blogs and divert search hits from the original blogger. That’s leads to losses in site visits, which means losses in blog ads, etc. If people start linking to the rss feed blog, then you lose the connections (technorati, etc.) to be found there. Hit loses geometrically explode until you’re trying to get some guy in the UK to quit spam feeding you.

    The copyright issues always go back to $$$.

    Comment by PK -

  15. Personally, I’ve had two files removed by YouTube due to “DMCA Violations” that were actually videos taken by me on my mobile phone. One was of a professional wrestler singing karaoke in my local bar and one was of a play during a baseball game. Strangely, thousands of MLB clips straight from television seem to be okay on YouTube, but my home video is verboten.

    Comment by tim in tampa -

  16. Hey Mark,
    Check out http://www.kwise.net to see an awesome mural of the 2006 Dallas Mavericks.
    Let me know what you think.

    Comment by KATRINA WISE -

  17. Mark,

    I know that this is a ‘blog’ and it’s like a journal, but you could really use an editor due to the amount of people who read and link to this site.

    Also, since you are against copyright laws and chasing after everyone, are you ok with me selling copies of your movies?

    And you’re right to be thinking that I’m probably too lazy to go peddle $5 copies of “Bubble” and “Good Night”. But still…

    Comment by kevin -

  18. Consumer’s have never waivered in their willingness to buy products despite the availabilty of “free” alternatives. Look when VHS came out. The film and TV industries went nuts. They thought they would never see a dime if people could just record off their televisions or even make a tape to tape copy. Did that stop people from going to the theaters? Did that stop them from buying VHS tapes? Hardly. This is the exact same thing. Does illegal downloading of full, high definition music and films need to stop? Absolutely. And it will be controlled eventually. But is YouTube so bad for the industry? Not all. The ability to view clips and hear songs in home-made videos only gathers more attention and more committed fans. For Christ’s sake, even ABC is showing repeats of their top rated shows online. It’s just going to take some time to figure out. Really, there’s no reason to panic and freak out. It would just help if the RIAA, MPAA, and all the major lables weren’t such money-hungry, out of touch old folks. There’s so many ways to make SO much money from all of these “illegal” sites and they big-wigs just don’t want to listen. If they’d listen to their customers, we wouldn’t be in this mess. Now they’ve just made the consumer their enemies, labeling them all as everyday criminals. Just wait until the whipper-snappers get up there.

    Comment by Matt -

  19. I totally agree with you, Mark. Sooner or later, Youtube will have to confront copyright protectionism.

    I wonder if anyone remembers what happened to Scour.com? They were one of the first search engines that provided information on where one could find entertainment on the web. All they did was to point to URL’s that posted entertainment content. They were sued out of existance by the major entertainment companies the tune of $ 425 Billion Dollars! They were a very successful site and were growing rapidly. However, they couldn’t even defend against the onslaught of lawsuits.

    YouTube faces the same scenario if they can’t control the flow of illegal content. It’s a shame, but a reality at the same time. Once its been decided that YouTube is not stimulating $$ for these content owners, they will proceed to exercise their control.

    Comment by Steve Goldman -

  20. Working against big companies is silly action. It’s like moving against forwardig train

    Comment by Admin -

  21. Just for fun, and as a follow up to justins post, had to take another trip down memory lane.



    This article originally appeared in the Videomaker Magazine November, 1999 issue.
    For this and other articles visit us at http://www.videomaker.com
    2006 Videomaker Magazine. Reproduction of this article for any use other than personal is prohibited.

    Videomaker Homepage Free Issue!

    Six Streaming Video Questions with Mark Cuban of Broadcast.com
    by Larry Lemm

    This last Spring, Yahoo!, the Internet portal, paid about $5 billion worth of stock to acquire Broadcast.com, a streaming video company. This transaction solidified streaming video as a technology not only to watch in the future, but as a technology to use today. Mark Cuban, a founder of Internet video portal Broadcast.com, is very hopeful about the opportunities this technology opens.

    Videomaker: What is Broadcast.com and what do you offer fledgling video distributors?

    Cuban: Broadcast.com’s mission is to turn the Internet into a broadcast medium. We are much like the DirecTV of the Internet. We have put together the technology, infrastructure and software, and have aggregated content in order to aggregate audience. With this base, we offer content creators the ability to put their products of all kinds in front of an audience at a minimal cost.

    Videomaker: Recently, I believe you made the statement “eventually most of the streaming video that people will see on the Internet will be home videos.” Why do you think that is true?

    Cuban: Only because of sheer numbers. It will be so easy to present video to small audiences. Instead of the summer vacation or wedding video sitting on the shelf, we will post them on our family web sites so that grandma and grandpa can watch whenever they want. We will do the same with high schools posting their games, debates and school plays.

    It will be far more convenient than corralling everyone into the family room or making copies of the tape to send everywhere. When you add up the numbers, a couple of hours from a lot of families dwarf the total amount of content created by traditional producers.

    Videomaker: When do you think we’ll see this shift in focus from commercial video to personal video on the net?

    Cuban: Over the next two years, as people get cable modems and DSL lines, they will start to put pictures, then videos up. All you have to do is look at the new Sony PCs with IEEE 1394 i.LINK interfaces to see how easy it will be. Soon all PCs will have these interfaces and the floodgates will open.

    Videomaker: What opportunities do you think this will present to videographers, Webmasters and advertisers?

    Cuban: There are two elements here, true businesses and labors of love. The labors of love that are non-commercial, will thrive. People will create their own El Mariachi-type productions for the ego gratification and some will get discovered and go on to bigger and better things.

    For businesses, there will always be a place for quality production. The quantity of home video will almost be equaled by the quantity of corporate video. These businesses will need top-notch production services for Internet and Intranet video. Every new product, shareholders meeting, new building and maybe even new employee will have some video component that will be hosted by the company. Webmasters will have to know how video on the Internet works and have partnerships in place to host and promote content that will reach outside the corporation.

    For advertisers, the realization should set in very quickly that the Internet world is no longer flat. That banners to catch people’s attention will diminish in effectiveness and video and other multidimensional elements, from animation to future media types will take their place. The agencies and advertisers that learn to harness this ability, particularly in a broadband world, will get far better results

    Videomaker: What will Broadcast.com do to support this trend?

    Cuban: We will continue to build our infrastructure to support the largest possible audience. We currently are pushing out broadband video at 700k, 30 frames per second. We will continue to push the envelope of technology, working with advertisers to introduce broadband video ads on our site, Media Asset Management partners such as ISLIP technology and with digital distribution opportunities as well.

    Videomaker: Do you think that streaming video will begin to rival television as the video delivery medium of choice?

    Cuban: I think that in the next five to ten years you won’t be able distinguish between the two. Think of it this way: ordinary cable TV is just a video monitor attached to a dumb computer (a set-top box), connected to a cable that goes to a network. The problem is that it’s mostly analog and doesn’t scale or do anything else. My personal thought is that a Pentium computer will replace the set-top box. It will have a DVD player, HDTV decoder, wireless keyboard, analog TV tuner, IEEE 1394 and USB connectivity. It will have a hard drive for a personal TV recorder and high-speed Internet access via an Ethernet connection out to a cable modem or ADSL line. And it will connect to a TV or PC monitor or both. Most importantly it will look like a DVD player instead of an ugly beige PC so we won’t be afraid to put it on top of the TV in the living room. All of this will become available for under $1500, starting by Christmas in small quantities, quickly dropping to under $1k next year. With one of these in the bedroom and living room, you won’t care if what you are watching comes from a traditional TV station over cable or from Broadcast.com over your Internet connection. You will just hit a button on the remote and go back to eating popcorn.

    Videomaker: What is the most important thing a home videographer can do to get ready to stream video?

    Cuban: Play with it. The more you know, the more you can try. You can go to real.com or microsoft.com/windowsmedia and find out what you need to digitize your creations. Once you have learned to digitize, you can get low-cost hosting space on sites like simplenet.com and upload.

    Videomaker: Where do you think the future of Internet video is headed?

    Cuban: All media used to be defined by its spectrum or physical form. You had a TV channel. You had a tape. Now all media is going digital. In a digital world, media can be stored on any digital platform, from a hard drive to a personal digital recorder. Or it can be transported on any digital medium from digital cable to DTV, to dialup over AOL. Because digital transport, like the Internet is becoming more available and less expensive, I think we will see digital video content becoming far more available where we want it, how we want it. This is both good news and bad news for the video business. It means there will always be an outlet for your work and that there will always be production demand. But because everyone has access, there will be far more competition to be seen.

    Videomaker: What do you think will be the biggest innovation for streaming video in the next year?

    Cuban: Falling bandwidth prices. More bandwidth to the office and home means more choice and opportunity.

    Comment by Mark Cuban -

  22. I have been singing the same song around here for months. I can tell you that for whatever reason I am a lone voice. The conventional wisdom here is that if YouTube can generate the traffic numbers they have, then it is just a matter of time before they figure out a way to monetize it. No one can clearly articulate how this will happen, but they are totally convinced that it will happen. When I bring up the copyright questions the answer is always, %u201Cwith so much money on the table YouTube and the copyright holders will be able to agree on terms and all will be well%u201D. I don%u2019t see it, but I guess it might be possible.

    I do remember SimpleNet. %uF04A If you ever made a mistake it would be getting too far ahead of the curve.

    Justin Madison
    <> From MC: Yea, we were way ahead. How many meetings did we have about how to upload user videos ? Is that software still floating around over there :).. I have all the emails from back then..

    Comment by Justin Madison -

  23. That’s not it. YouTube is not just videos, it’s a downloading service. It’s potentially a gold mine.

    The copyright issues will not sink YouTube for the previously stated reasons. The high download expenses can easily sink YouTube, a subscriber service won’t save it in the long run. But there is something else. There’s another reason why TImeWarner got involved in YouTube (and the reason ain’t to sell movies… TimeWarner people aren’t dumb).

    It must be electronic print, electronic books, eprint, ebooks. I’m betting that they’re aiming at the next phase in electronic device, an ebook or etablet. There must be something in the works.

    They must be aiming to replace paper books, mags, etc (aiming squarely at Amazon) with an electronic book device. YouTube can sell and download TimeWarner periodicals, books, etc., and also license to sell other’s copyright material. Is Apple going to market an ebook device?

    Comment by freeway2000.com -

  24. Mark, You have convinced me. As you know, I was a VP at Napster and fought the good fight. Emotionally I am with YouTube, but from a business perspective there are better places to invest my time and money.

    You made three powerful points that really clinched it for me.

    First, you said the Hollywood content owners will sue and even if they don’t win at first they will just get Congress to change the DMCA laws. You are absolutely right about that. The Hollywood studios have the US Congress in their pocket.

    Second, on a pragmatic level you basically said it is hard enough to build a new business and beat out your competitors without taking on the added burden of endless lawsuits. Right again.

    Third, any big company that would acquire YouTube would be exactly the deep pocket target the lawyers are waiting for. Bertelsman can attest to that from the Napster case.

    Strike three. Game over. You win. Thanks for playing along.
    I acknowledged your win in my blog today “Mark Cuban analysis of the YouTube situation” http://dondodge.typepad.com/the_next_big_thing/2006/10/mark_cuban_anal.html

    Don Dodge

    Comment by Don Dodge -

  25. “They were the first site I had seen that had any traffic at all that was going to risk it all by saying that since users did the uploading and all they were doing is hosting the files, they fell within safe harbor rulings of the DMCA.”

    Not true. Usenet providers use this precise defense. Since quite a few ISPs still host binary newsgroups (eg Qwest) ie the ISPs are usenet providers, there’s a good chance your ISP is using this defense to defend the binary postings on its newserver.

    “Now all this so far presumes that Youtube qualifies for the safe harbor act. Personally, and Im not a lawyer, I dont think they do. To qualify, as I read it. They arent allowed to change the original file they host in any way. Well Youtube re encodes the video into the FLV format.”

    In that case Easynews would be in heaps of trouble because their web interface changes the original file ie it recombines multiple parts of files into one file. Yet, they’re not in legal problems.

    Comment by Dan the Man -

  26. Hey Mark, I appreciate your taking the time and effort to share your thoughts. I’m going to disagree that YouTube is the next Napster. With Napster, people could trade high enough quality audio with each other so that there was legitimate concern that the market for music was hurt. And so a clear majority of rights holders were against it. Some who felt they could share their ways to fame and success set up and participated in “alternative” services (e.g. Magnatune), but most realized that Napster and follow-ons were about distributing high quality reproductions of their product and them not getting paid.

    YouTube is low quality and format constrained. You’ll find lots of show clips, few full length shows. Lots of show clips from shows that are too topical to have enduring reuse/resell value, like The Daily Show, Colbert Report, Letterman’s Top 10, etc. And you’ll find scenes from shows that aren’t on the air. I’ll admit, I discovered “Firefly” that way. Then bought all the episodes from iTunes Store and watched on a 23″ screen rather than in a tiny window.

    While users may be offering this content now, I’d imagine that many content producers and distributors will be happy to push out legit, packaged content to YouTube. If YouTube is paying for bandwidth, it’s a no brainer. People who are interested in high quality video of the full shows can be pointed to a cash register.

    But still, some content owners will object. Perhaps if their stuff is posted too early or too long of a segment is posted, or whatever. And they might sue. But I think it’ll be tougher politics than Napster. Nobody really believed you could have people share your music to profitability. Too easy to make and distribute high quality copies. Lots of people believe and have business experience doing this with video online. Lars Ulrich was just despised for the stand he took over Napster. The future Lars for YouTube would probably be shot.

    Comment by Brad Hutchings -

  27. if someone from youtube uses a content that they doesn’t own there’s one thing that they bring to the copyright owner, they made them popular. youtube have large, as i only see, number of users from different sides of the world. so maybe, copyright owners and companies can start making and uploading their video ads on youtube because most often youtube’s users do not have the time to watch tv. they stay online most of the time. in this case you can gain customers and the same time protecting your copryrighted content because you as the legit business owner uploaded it.

    Comment by ikabon -

  28. why not use a filtering service like snocap and prevent all copyright infringment? content can then be monetized

    Comment by Drama 3.92 v1.0 -

  29. YouTube should just move their entire business to Thailand and ignore American copyright laws. If the Thai government decides to enforce copyright laws, they’ll change their mind with bribes.

    Comment by fast eddie -

  30. Mark Cuban is right in asking for more stringent copyright protection in regards too video but he does miss some points on how you tube could be benificial. I live in a crazy place called Australia and basketball media is literally banned. the normal mediums that we used to rely on to get nba including tv and pay-tv have literally stopped playing sports. In case many of you guys didnt know Australia has a rich and long history of being involved with basketball and we recently won the fiba world championships for women, which got a grand total of zero minutes playing time. I would be happy to put $50 in the nba’s pocket per week to get nbatv or another live medium but we can’t do that over here. I am a strong believer in intellectual property rights and it’s importance on society, and to compensate the nba I have bought over $500 worth of nba merchandise so that I dont feel guilty for stealing there product (including unfortuanatley a pre-release of the miami 2006 chip). If you want people to stop stealing your product then make sure people have access to it legally in an affordable manner in the first place otherwise shut up.

    Comment by nima khaze -

  31. I think that YouTube will be the next Netscape or Govworks.com
    It may work in the short term but in the long term it has too many obsticles in its growth path….Copyright…Growth in USA/Europe will reach saturation point….it just the press and user flavour of the 2006….next year there will be another service that someone is working on right now that will kill YouTube in terms of UI, Speed, and Content.
    I am an expat thats lives and works in China and have friends working in China, India and UAE. And we have all given up on YouTube because it is so slow (we have 10Mpbs connections) and is too USA/Western orientated. Therefore there is only so long that people in those markets think its funny to watch someone crash a car, or set themselves on fire or watch some bad grainy version of a TV Show(when they can use a DVR or TIvo).

    There are many services in China and India that are only China/India orientated that are faster and enjoying fast growth.

    YouTube is going to face the same problems that many internet companies face and that is fashion trends. The internet is a harsh place and there are many sites out there that their growth has plateaued or decline just as quickly as it rose due to competition, changes in laws, users fickle and short attention span, etc. YouTube could survive but whether it will continue to have the users that it currently does will be interesting to see. It will need to reinvent itself fairly quickly.

    Comment by Damian -

  32. There are two markets on youtube.

    1. Those who use it to see the latest clips of television shows, post viral videos, live musical performances, music videos, etc. Rehashed/Reposted content. This is where a lot of the copyright infringement comes from.

    2. The “Original Content” posters. Those who have made short films, comedy sketches, have their own musical performances and videos, and etc. Obviously some of these use images and music that is copyrighted content.

    The first group is obvious larger than the second, but the second is formidable. So if YouTube is forced to remove all its copyrighted material, odds are it could still make decent money off of the second group through marketing and advertisement. Maybe not 1.5 billion – but something more reasonable.

    Comment by Todd Johnston -

  33. Drama 2.0: I understand your perspective and believe me I am not trying to make it sound like YouTube is a sure thing; I was just giving my opinion on ways they can try to overcome their challenges. The fact that the owner refused to implement that advertising model is a surprise to me, perhaps he doesn’t really know what he wants to do, I think it’s a very good idea and I wonder what his reasons are. Yes it is a challenge to try to make a good profit with the high bandwidth costs but it isn’t impossible. I really don’t think YouTube is worth the billions they claim, but I do think they can be profitable. Copyright issues asside, they have alot of unique content (I learned to play the piano a couple months back =]). With 19.6 million users (Neilson NetRating 7/06), It costs YouTube 1 million a month to operate. Thats 12 million a year, it costs $1.6 dollars to serve each user every year. If I were YouTube I would implement that advertising model I previously mentioned for one, and I would offer premium movies and videos for sale just as well (take a look at GUBA, I am playing V for Vendetta at the moment and for just $0.99 and it looks spectacular as it streams, well near DVD quality). I would offer subscribed users the ability to upload bigger resolution video uploads and give them the added bonus of not seeing any ads. Give users incentives to upgrade or if not really push the premium content. The trick is to make your users happy whether they pay or not, give them a good experience.

    Comment by Raineri Bello -

  34. Raineri: Your analysis is way off. Flickr is not as popular as you think. According to Hitwise, Flickr is the #6 photo sharing site with a meager 5.95% marketshare. It’s very popular with the Web 2.0 crowd, but in terms of mainstream penetration, most Internet users don’t use it. They probably turn a profit (I’ve heard estimates of $25-$50 million/year in revenues, which is not entirely comprised of subscriptions), but their business is an apples to oranges comparison with YouTube. First, the cost of serving photos is a lot lower than videos, and Flickr does a lot less volume (result: higher margins). Second, Flickr is about sharing photographs. They don’t have the copyright and rights clearing/royalty issues that YouTube has and will face (result: higher margins). And lastly, Flickr is already a part of Yahoo (rumored purchase price $30-$40 million), so while profitability is important to them, they have the resources of Yahoo at their disposal. YouTube is on its own. The net-net is that Flickr is a much less complicated business to run and the operating costs are significantly lower than YouTube’s. Flickr will never be a $1.5 billion business. YouTube thinks it is but has some very significant challenges to overcome and it’s unclear whether there’s a profitable business model to be found that is satisfactory to all stakeholders.

    I have provided hard data (“proper market research”) as to how much the average consumer spends on paid content services each year ($100) and the total size of the US market ($2 billion). YouTube is competing for those dollars, and they’re competing against other services that will remain free.

    Giving you the benefit of the doubt, however, please share with us how you define a “power user” and what “power features” YouTube has, or could develop, that a significant number of these users would pay for to make the revenues material to YouTube’s success? You seem to think that it’s easy to add features that people are willing to pay for. Let’s hear them. In a highly-competitive market where technology is a commodity that is easily replicated, this is not as easy as you seem to think. I go back to online dating services as an example. It’s much more difficult to get younger customers to pay for services like Match.com because social networks like MySpace and Friendster provide a satisfactory enough platform for finding relationships. Match.com has a number of features that differentiate them from the free social networks, but it’s still a tough sell. Many reports highlight that free social networks, coupled with low barriers to entry, have made the online dating businesses a lot less lucrative than it once was. The market isn’t going away and there will still be substantial revenues, but margins are forced down. For your reference, look up a Forbes article entitled “Getting Couples To Click” which discusses the increasing customer acquisition costs for online dating services due to increased competition on all sides. Outside of marketing, building and running an online dating service is very cheap, whereas YouTube has very high operational costs, which puts them in an even tougher situation. Incidentally, it’s the tough youth demographic that is used to getting things for free (MySpace, Napster, etc.) that YouTube would have to convince to pay. Youths have massive purchasing power, but all the data I’ve seen indicates that the vast majority of it is not being spent on online content.

    The questions for a YouTube subscription service are:

    – What features can YouTube reasonably charge for?
    – How much can they realistically charge?
    – How many users can be expected to pay?
    – If the features being charged for are already offered free of charge, or are free at competing services, how many users can YouTube expect to lose?

    Only with these answers could one determine if the subscription revenues will have any positive impact on YouTube’s business. Under many scenarios, it’s very possible that they will still lose money and will actually drive users away.

    Regarding your comment about marketshare, it’s actually apparently very easy to steal marketshare in the online video space. Look at the latest comScore data. MySpace Video has very quickly overtaken YouTube. That’s with no significant differentiation and little to no marketing expenditures (MySpace is simply leveraging its existing userbase). At the end of the day, the youth market that YouTube is most popular with is highly fickle and has little brand loyalty. The majority of users don’t care whether they’re using YouTube, MySpace Video, Revver, etc. They’ll use services that are free, convenient and have the content they want.

    Additonally, your comment about embedding 15 second advertisements shows your lack of knowledge about YouTube. YouTube’s founders have repeatedly stated that they will not do this under any circumstances. That could change, of course, but I wouldn’t offer that as an option at this point given their statements. And as I have pointed out in some of my previous posts, questions remain as to whether this could be profitable (too much inventory, lots of unsalable video, lower CPMs, fixed market size, etc.).

    It’s really amusing to see all these people that make it seem like YouTube is a sure bet and that they could easily be the next billion dollar media behemoth. “Just add advertisements”, “find out what users will pay for”, “do market research”, etc. YouTube has access to very smart people. The fact that they’re still struggling with these issues doesn’t mean that they won’t come up with viable solutions, but it does reflect that the reality of the market is a lot different than the fantasy world a lot of the armchair CEOs envision. There’s a huge opportunity here for sure and YouTube could be sitting on a gold mine. But anybody in the mining business knows that there are many massive mines that never get exploited because the costs and barriers to making them viable (profitable) mining operations are too high. At the end of the day, the economics have to work in the real world.

    Comment by Drama 2.0 -

  35. Brant,

    Yes, I can easily replicated the entire site myself. But can you replicate the number of users? I don’t so, not easily anyway. Youtube has majority market share in this category, they have the advantage. Now if they can properly do their research and find out what their users really want and how advertisers can make money out of this then they will certainly win. If they sleep and let it slip through their fingers then certainly somebody else with a better service will steal away the crowd. But don’t assume its easy to steal away market share cause I’m sure you would’ve done it by now if that was so.

    Comment by Raineri Bello -

  36. Cuban could very well be the only middle-aged man who truly understands todays technology, who just so happens to own an nba team. Everything he said is right.

    If you compare youtube to napster in terms of how revolutionary it is. . Youtube loses. The only reason they can offer their service is because BW and hardware doesnt cost as much these days. Heck, free email accounts are now in the gigs. Hard Drive space doesn’t even matter anymore. On the other hand, Napster created a new techonology, p2p. Youtube just lets you upload movie clips of any kind. Big difference. YouTube can be replicated in a very short time with a few programmers and about a week of free time.

    In the end, it doesnt matter what will happen to YouTube, as Cuban said others will pop up. The only difference is that they will be better.

    Comment by brant -

  37. In response to Drama 2.0,

    I think you assume to much when it comes to what users are willing to pay for a service. And also you don’t have to charge everyone, just the power users for the extra features. This is where proper market research comes into play.

    Take a look at flickr. A pretty basic service that can easily be replicted. Why is it so popular, and why are people willing to fork over cash to become pro members if so many free alternatives exist? Because flickr provides value. It provides extra storage as a result of a membership, it allows users to become part of a larger community of photo enthusiasts. It has an easy, and well designed interface.

    What YouTube has to do is charge the pro users for the extra benefit features, not just crap feature — real value added features. Then come up with a proper advertising model so that they can offset the money they are losing to bandwidth costs. With the revenue from subcriptions and a proper advertising model they should create a profit. They just have to come up with a model (perhaps embed a 15 second advertisement in videos) and entice advertisers.

    Comment by Raineri Bello -

  38. Admidst all the back-and-forth and the re-analysis of the analysis this line is what resonated with me:

    “All the excitement of discovery that we all felt when we first started using Napster”

    It’s about getting into a groove, moving from one experience to the next, a massive treasure-trove of almost everything you want to see, always more, always free, always quick.

    No barriers, no passwords, no questions, no monetizing, no upsell, no quotas.

    Without regard for where it came from, what it took to get it up there, who’s being screwed out of some royalty.

    An endless party with open bar, all-you-can-eat buffet and smiley happy people.

    What a country.

    Comment by Nick Braak -

  39. Copyright laws are very tough and protect the holder. The question is a more of a strategic one — will they want to sue or do they see people using their songs in Youtube as free exposure and marketing? If one record company sues, and another one aligns with Youtube, who wins? I would rather align, and take the free exposure and marketing. I would search on who is using my song or video clip and add links to purchase the CD/DVD or download via itunes — even if it is just using Google adwords. Youtube — friend or foe of the copyright holder?

    Comment by Jim Elliott -

  40. Thank the heavens, there’s actually a well balanced article on YouTube in the New York Times, a mix of interest and skepticism:


    Although a questionable quote:

    “YouTube has started to attract mainstream advertisers and the site has become financially stable, Mr. Hurley said, despite the huge cost of showing more than 100 million video clips a day.”

    This is a breath of fresh air after reading that puff piece in Forbes. The New York Times never fails me….

    Comment by Chris D -

  41. Internet bandwidth isn’t fast enough for home users to download high quality DVD’s etc. Utube has very low quality conversion and streaming quality, I don’t want to watch that crap when I can get it elsewhere. They’ll attack torrent downloads first, thats where the resolution is. People love HD quality if they can get it, but try streaming a 4 gig file? Maybe when we get faster connections.

    As far as the short TV episodes, still not an issue. As far as i can tell, nobody gets angry for addicting more people to jack bower. You’re just selling their show’s brand, you’ll probably tune in next season and watch the ads too. In fact, you might stroll over to the video store to pick up the last 4 seasons. Its all about addiction. Movies are comletely different, thats a one hit wonder, you’re not going to tune in again next week so you can watch ads.

    Movies shouldn’t be a one hit wonder though. Wes Anderson is my favorite director, and I’ll go see anything he puts out – at least twice. His movies are just different episodes, using alot of the same actors. Get people addicted to your actors and directors. Just like people get addicted to the Mavs and will watch from Europe for 2.5 hours because they like Dirk. Go Mavs!

    Comment by digital2 -

  42. Ok, Mark, riddle me this.

    What if a certain owner of say HDNet had stricken deals with a bunch of companies to be able to broadcast their offerings in any format available?

    What if said owner then publicly and loudly cries out about what a broken model a video hosting service is and how there is no way it will make any money, therefore driving said service possible asking price down?

    Then what if said person then buys hosting service at an extreme discount, removes all media that he didn’t already have wrapped up under his HD licensing, and then revampls service as subscription based at a nominal fee, say $39.99 yearly with understanding that only media previously licensed or created new could be uploaded?

    Then what if that same guy paypalled me a cut for discovering and pointing out his strategy, not a large cut, just something in the high 5 figure range?

    Comment by Tracy -

  43. I can’t think that Youtube can survive. The monetization required to pay for the bandwith is one factor, but definitely the biggest problem could be the copyright issues they are facing.

    Comment by SED TV Fan -

  44. A subscription service won’t work. YouTube is popular because it’s free. With all the other video sites out there, the new ones launching every day and the ones that are certainly under development, the vast majority of YouTube’s users have no shortage of alternatives that they would migrate to if YouTube started charging. In fact, according to the recent comScore data, MySpace Video has already surpassed YouTube, and that’s without YouTube charging. MySpace is simply leveraging its existing position and audience, showing how vulnerable any free service like YouTube is due to the fact that there’s no strong lock-in with consumers that use the service.

    It’s a lot harder to run a subscription service today than it was in the early days of the Internet. Just ask all the dating sites like Match.com. They still make money, but free social networks like MySpace have cannibalized a large part of the market and eaten into their revenues (less people willing to pay, higher customer acquisition costs). Sure they provide some value-added features you don’t get on MySpace and the payment serves as a quality filter, but for the average Dick and Jane, when it comes down to free versus fee, free wins.

    A successful subscription service needs to have some sort of exclusive content and/or differentiation that is so compelling to users that the value proposition makes it worthwhile to subscribe. According to the Online Publishers Assocation:

    “The average consumer has spent around $100 for online content every year since 2002.”

    That’s not much, and the amount consumers are willing to pay has remained relatively fixed over the past 4 years. The paid content market is growing in size because of new customers, not an increase in per customer spending. YouTube would be competing for a piece of this $100, and with competition from free services offering the same features and content, it looks like a losing proposition.

    By the way: the total market for online paid content in the US in 2005 was $2 billion according to the OPA’s Paid Content Report. Unless YouTube was able to capture a large share of that (which is unlikely), the $1.5 billion valuation they’re seeking would be hard to justify with a subscription model given the discount a sane investor would have to include given the risk and competition.

    Comment by Drama 2.0 -

  45. Youtube can implement a monthly fee for it’s users. This fee can be broken up into three different users a Heavy, Medium and Light user. As for the content owner’s if they can prove that their content is on Youtube they can apply for a revenue stream from Youtube depending on what percentage of Youtube’s site is made up of their content. So in theory use the paid subscription revenue to keep the “Content Owners” Happy. For EX. Time Warners Content makes up approx. 14% of Youtubes site. You tube then can cut them a check each month for 10% of the user’s income and keep the other 4% for Youtube.

    Comment by Mason -

  46. I agree that a subcription model is a good option for revenue. Perhaps allow subscribers to stream higher quality, bigger resolution videos. Make it the flickr of videos. Flickr has alot of loyal users, and they are making a ton of cash. Its all an act of balance.

    Comment by Raineri Bello -

  47. Netflix on a hard drive is bupkis, but you are right on this one.

    I wouldn’t fully dismiss the opportunity for escape velocity however. A subscription revenue model strapped on to this beast could potentially give the money to navigate these issues *if* the money is then sufficient to pay contributors, filter out exaggerated abuses, and contribute significant sums to a generalized licensing pool for the MPAA\RIAA. This scenario generally requires that the axe drop on all other ‘free’ sites.

    Such a thing is almost ludicrously unlikely unless the potential revenue is sufficiently appealing to the agents of the rights holders. And sure, people abhor paying for new forms of content but YouTube is becoming quite the rule-breaker. There will be tears at its funeral.

    Comment by Aron -

  48. Ok Mark,

    Take for example the teenager who downloads copyrighted software and the father gets sued because he is head of household and the computer is in his name.
    Personally I agree with you that copyright laws are a bit excessive and burdensome. There are instances when they are simply unfair as the above example shows.
    The other side of the coin is what about the artist, programmer, etc who toils but gets ripped off because everybody can download his idea for free.
    I believe copyright law should be dealt with on a case by case basis. Let the next youtube come along we will take a look at it then and see if it is legal or not.
    For right now! This youtube’s business model and legal strategy is good. If the deal with Warner goes through the guys will be rich.
    I can’t say I blame them for trying to be the next rich.com story.

    And I agree this topic is a good discussion.


    Comment by Antonio Howell -

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