How YouTube Kicked Google's Ass (and everyone else's too)

YouTube launched last summer and is now the 23rd most trafficked site on the Internet (according to Alexa).  Comscore Media Metrix has a slightly different picture, ranking YouTube as the 89th most trafficked site with  276 million page views in April.

To give you some sense of the growth of YouTube, it didn't even make the August Media Metrix report, had 1 million page views in September, and only 50 million page views in December. It has grown five fold in four months.

YouTube has captured the leadership position for video on the Internet and that's an incredibly valuable place to sit.

I am taking a bit of a leap in saying that YouTube is the leader in Internet video.  I saw this chart in USA Today in mid-April:

MSN video 9.3M visitors, 44% change

YouTube 9.0M visitors, N/A change

Google Video 6.3M visitors, N/A change

IFilm 4.3M visitors, 102% change

Videosearch.yahoo.com 3.8M visitors, 148% change

Source: Nielsen/NetRatings

But I suspect YouTube is the king now and I'll tell you why they got there so quickly and why Google blew an opportunity to be the king of Internet video. It's also a very important story in an era when people are starting to think that the top online properties are untouchable. That is very far from the truth, MySpace, YouTube, and Wikipedia have all gone from nowhere to top 30 status in the past three years.

YouTube wasn't the first Internet video sharing service, that claim goes to Vimeo which launched at the beginning of 2005.

And YouTube didn't beat Google to the market.  Google Video launched in beta in June of 2005.

YouTube wasn't first and they didn't beat the big guys to market. But they did do three things, that in combination secured them a leadership position that to me looks pretty unassailable.

First they launched with a really slick flash player that almost everyone else has now copied. They bet on flash and they were right.  For video playback on the web, flash is the way to go.

Second, they provided immediate playback. When Google Video launched, I uploaded a video and had to wait for days to see it playback.  Needless to say, I've never uploaded another video to Google.

Third, and this is the biggie, they provided an easy way to embed their flash player and a specific video in another web page. This too has been copied by most everyone in the online video business. But if you go back and look at YouTube's traffic, the day they let people embed their videos in MySpace pages is the day they took off and never looked back.

One of my favorite blog posts is this one by Ari Paparo describing how two or three minor features was the difference between the failure of Blink and the success of delicious.

Little features, often the social ones, make all the difference in web delivered services. YouTube got it right.  Google and everyone else didn't.  And the result is YouTube's market leadership.

Many people will read this and say that this is all bull and the real reason YouTube is the leader is their reliance on pirated video and that they are headed for a fall now that the owners of that content are getting wise to the illegal use.

To that I'd say yes and no. It is true that YouTube lets anything go up and only takes it down when they get a request. But they do take it down.  See my post on the Stephen Colbert video yesterday for a good example of that.

There are several reasons why YouTube won't follow the path of Napster. First, users will keep uploading video that they want to share to YouTube because its easy and at least for a while their friends and others will be able to see it before it gets taken down. The users are the "bad guys" and YouTube gets to play by the rules. And second, because the content owners are going to get wise to the fact that this sharing actually helps them. And third, content owners are going to figure out how to monetize this video by claiming the video, swapping out their video for the "pirated one", and putting a pre-roll or watermark advertisement into it.

But the bottom line is that YouTube has captured the hearts and minds of the Internet audience. They are "the place" to upload video and to go see video. They are the good guys.  When a content owner takes down video, the people cry foul.  They love YouTube and they get mad at the content owners.

Google doesn't have that reputation in online video, Yahoo doesn't have that reputation in online video, Microsoft doesn't have that reputationn in online video.

YouTube does and that's why they are the king. And they got there by making a few key design decisions last summer. And the rest is history.

Comments

[ned]

Guess I must just not "get it". Market leader or not -- how is youtube a good business in any traditional sense?

[al from chicago]

Great great post, Fred. As an entrepreneur, one of the gaps in every company write up or biography I read is how did they get to that first critical mass in the first place; what did they do to get to that higher energy field? If you read any stories on Oracle, for example, they tend to quickly go from startup to 100MM in sales. It's what you do in the first 6-12 months to break through that matters, and it is awesome that we're able to zero in on what happened in recent recent history to allow YouTube to breakthrough. This is extraordinarily CONSTRUCTIVE for entrepreneurs.

[fred]

they get 267 million page views and are seeing 6.5 million unique people per month and have the opportunity to run video advertising - the holy grail of internet advertisiing - to these people.

that feels like a great business opportunity to me.

fred

[Tom Labus]

How do they control their bandwidth costs before they figure out their advertising model?

Is this a game of Bandwidth Chicken?

[eli]

"YouTube wasn't the first Internet video sharing service, that claim goes to Vimeo which launched at the beginning of 2005."

Javu's Videofarm was a video sharing community launched in 2000. Videofarm won the 2000 Webby for best broadband site (over atom films), and had Java-based online video editing and browser-based remixing. Earthnoise, Popcast, Eveo, iCast, and LifeClips soon followed suit. Eveo is still around, providing rich media communications for the pharmaceutical industry. Also, Oddcast came onto the scene with flash-based video remixing in 2000/2001, and is now known for Sitepal (see Fred's homepage avatar).

Also, Medicinefilms.com launched in January of 2004. I talked about them at Vloggercon last year when Vimeo was still Jakob's personal automatic movie machine. Here's a simple remix a medicinefilms member made of my vloggercon talk, using it as a jumping off point to critique MySpace.

[rob]

If YouTube can navigate the path between today and tomorrow's amazing growth then I agree but that is, unfortunately, a big "if". Afterall, how long is it going to be before people get sick and tired of the small/grainy resolution? What happens when users want a bump up to higher/HD resolution? What are the bandwidth impacts? I'll take a guess that they are staggering. This next question is out of pure ignorance - would their flash player even support that move to high res?

Personally, I like the concept behind the new Tivo/Brightcove partnership. They can leverage Tivo knowing what you REALLY watch to match up some focused advertising and then let you conveniently watch the shows on, surprise surprise, your TV! The limiting factor there is Tivo's embedded base versus YouTube's web presence but maybe this is the thing that we should really be talking about instead of web 2.0 mashups - it's an internet enabled solution.

r.

[Anon]

Great Post. Extremely useful to re-inforce the small but critical decisions

[fred]

Eli

i apologize to everyone on your list for getting that wrong.

it just shows what i know about the Internet - not much!

Fred

[jim]

Speaking as someone working for a "content owner", youtube kicked us off for putting up video that we legally air on a daily basis. I love their service, but it's not JUST content owners who are flagging things. anyone can flag a video, and it'll be deleted, which led to a ton of our videos being banned at once and the deletion of our account. Again, for stuff that is aired on cable tv nationally without any problems. Stuff like that makes youtube the bad guy sometimes.

I know you have to protect copyright, but there's a fine balance, and I think they come down too hard on the side of throwing people off and deleting everything they've uploaded.

[Pete Cashmore]

Fred,

I think this is a great post, and agree 100% on your reasons for YouTube's growth. What amazes me is that the other players still suck by comparison (even ignoring YouTube's network effect and bigger content repository.) Some haven't even gotten wise to Flash yet, while others don't include comments. Google Video could have won in this space (and could still be a killer product) if Google actually understood how to build communities.

[Anon]

Hi Fred,

Quick disclosure qestion: Do you have any business ties to YouTube?

[fred]

Anon

I do not have any business relationship with YouTube other than being a user of the service.

Good question and thanks for your interest.

Fred

[Jason]

I hate your position on this one Fred... yes, they did good stuff, but they stole their position.

turned my comment into a post:

http://www.calacanis.com/2006/05/11/how-youtube-won-great-seo-stolen-content-or-the-biggest-hit/

[howard Lindzon]

Who cares about why they are winning or how much it costs or how they may make money and who they beat.

Let's talk about the real issue - THE SPEEEED in which they became who they became.

How cool is that!

That's what is the study point. The real power of web 2.0.

More on my blog. Great thinking post Fred - thanks

[lawrence coburn]

Fred, I love your point about that one little feature that make such a difference... I think it's important for all entrepreneurs to believe that. If we just think a little harder, read a little more, listen a little better... we can find that feature.

And blow up like YouTube.

[Rick]

My customers, mainly small publishers and political groups (candidates, political action orgs), won't use YouTube but they love to use Google because of Google's name and because of the imbeded flash player.

[Erik Schwartz]

YT got big quickly because they had good clean execution of a desirable product with the right feature set and gave it away for free.

The question is can they monetize this audience?

Can they earn more revenue per minute of video content than the cost to stream and store the minute of video content?

Will their viewers put up with a pre-roll ad?

Will advertisers want to associate their brands with unknown content appearing on undefined websites? What will the rate card for that look like?

Will content providers start to demand a revenue split when YT starts to make money on their content?

[bobby]

Erik...
the answer to "Will advertisers want to associate their brands with unknown content appearing on undefined websites? "

http://www.youtube.com/results?search=unpimp

[Erik Schwartz]

I'm seeing Google ads.

Did VW pay YT? I'm not saying there aren't ads. I'm saying no one is paying for ads. If YT wants to pay for the distribution of VW's ads for free I doubt VW will stop them.

[Gabe Morris]

"One of my favorite blog posts is this one by Ari Paparo describing how two or three minor features was the difference between the failure of Blink and the success of delicious."

One feature that both YouTube and Vimeo have is the ability to easily contact the person that has uploaded any video. Google, Daily Motion, and a bunch of the other video sharing services don't have any embedded "Contact" button to let people reach the content creators. If one of the main incentives for content providers to post their work on these services is that they gain a business development platform, then Google doesn't really help. You can put your web address in the video description or put a watermark on the video, but the "Contact Me" feature isn't baked into the service.

I license video for my company. I've found great material on YouTube, Google, and Daily Motion. But I only license the stuff I find on YouTube because it's simply too much trouble to try and locate the content creators that post on the other services.

[Megan Cunningham]

Fred

Great concise analysis. I'd argue that the battle may have been won, but the war is far from over.

(First a disclosure: my company, Magnet Media, works with and for many of the leading software companies in this arena, namely Apple, Adobe and Microsoft.)

The YT choice of Flash as a platform is undoubtedly the right one for today, and their option to provide immediate-playback for user-uploaded content *is* their killer-app feature. How Google and others missed this is beyond me. File sizes aside, had they never used Flickr, oPhoto or SnapFish and seen the relative differences?

But then you say, "If you go back and look at YouTube's traffic, the day they let people embed their videos in MySpace pages is the day they took off and never looked back..."

The concept of user-generated posting/hosting --which I agree, is a sure-fire viral growth tactic for the present moment-- may well be superceded in the next wave of internet video growth which I would argue is all about SEARCH. Something Google knows a thing about. Why search? Because without a solid metadata scheme, there is no true advantage of internet delivery of content over pre-existing (and far superior) traditional means. At it's essence, the media business can be boiled down to one challenge: how efficiently can quality content find its audience. On the web, search is tied into both monetization and audience-building at the mass-market level. This is true regardless if you feel the future of VOD will be based on niche-content subscription sites, PPV, or --the inevitable big hit-- advertising and sponsorship support.

For those who are interested in what internet video means to the media industry, I just started a series of posts about this, and we're producing many of them as podcasts and internet video --so feel free to chime in: http://www.zoom-in.com/blog

[Steve Rosenbaum]

Actually, i think an argument can be made that GoogleVideo and YouTube aren't in the same business.

YouTube clearly owns the 'instant video' publishing space. With no barriers for customers they've chosen scale as their primary feature. There's no doubt that it creates a fun, sexy experience driven by instant gratification. They will absolutely monetize their position and remain a major player.

Google, on the other hand, is built from the ground up as a 'long-tail' video play. They specifically turn away the 'instant-upload' business that YouTube invites. Instead they're focused on tools that enable the monetization of content (as opposed to advertising) which means that they've opted for quality over quantity.

You can make strong business arguments for both of these cases. But i think it's fair to assume that the guys at Google aren't worried about YouTube's traffic. They're playing a different game.

Video on the web isn't even a year old - in terms of it's legitimate arrival on the scene. And the next 18 months are going to reveal a number of emerging use cases for video... as both capture devices and playback platforms evolve.

YouTube's stats have startled the media business, at least in part because of the alluring combo of YouTube and MySpace as a way to talk to hard to reach young men.

But Google (and folks like BrightCove and Akimbo) are building platforms with revenue that will empower a new generation of content makers and marketers... and they'll certainly make money as well.

It's a great time to pay attention to video... great things are happening.

Thanks Fred, for being such an early advocate for this space...

[Steve Rosenbaum]

and then again... maybe i'm totally wrong (*grin*)

http://arstechnica.com/news.ars/post/20060517-6850.html

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