Tuesday, November 14, 2006


Can YouTube stay on top?

  • Tuesday, November 14, 2006
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  • It's only been a little more than a month since Google shook up the online video world by announcing that it was buying YouTube for $1.65 billion.

    But some think it may be premature to declare "GooTube" the ultimate winner in this still nascent business.

    n the past few weeks, several media organizations, including Viacom (Charts) and a trade group representing various Japanese media firms, have asked YouTube to remove pirated clips from the site.

    At the same time, several media firms have stepped up efforts to promote their own broadband video offerings.

    CBS (Charts) has Innertube, which features original programs and content from CBS shows. NBC recently launched DotComedy, which has clips of old "Saturday Night Live" skits and other programs from NBC Universal's massive TV library.

    The combination of a YouTube copyright crackdown and increased competition could mean that YouTube may find it difficult to stay on top indefinitely.

    To be sure, there does not appear to be any sort of YouTube backlash so far. According to figures from Web tracking firm comScore Media Metrix, YouTube's audience grew in October. The site had 23.5 million unique visitors last month, compared to 20.8 million in September and 19.1 million in August.

    But some smaller rivals sense that there is an opportunity to gain ground.

    Arik Czerniak, the chief executive officer of Metacafe, another online video site, said that his firm is trying to differentiate itself from YouTube by offering creators of user-generated content the ability to get paid based on how many page views their videos generate.

    Another online video site, Revver, also pays users who submit popular videos. Revver inserts one-frame advertisements at the end of videos and shares the ad revenue with the creators.

    "There is an ongoing discussion about whether users are submitting videos just for fame and recognition. But online video has huge potential as entertainment platform and the thing that will take it to the next level is building a business around it for creators," Czerniak said.

    Metacafe has seen its audience grow in recent months, from 1.8 million visitors in August to 4.2 million in September. Traffic dipped to 3.7 million in October, though. Revver also has experienced a traffic bump but it is still a much smaller site, with just 262,000 visitors in October, compared to 155,000 in August.

    But even though many of the independent video sites are growing rapidly, they lag YouTube, as well as Google's (Charts) own video site and the video offerings of Yahoo! (Charts), News Corp.'s (Charts) MySpace and Microsoft's (Charts) MSN, by a wide margin.

    Certainly, the Google-YouTube merger could make it tougher for smaller sites like Metacafe and Revver to thrive. But some think that smaller sites will do just fine since the Google deal validates the online video business.

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