YouTube Losers

On Oct. 10, the owners of YouTube announced that they'd sold their successful video-sharing service to Google for US$1.65 billion.

YouTube Losers

On Oct. 10, the owners of YouTube announced that they'd sold their successful video-sharing service to Google for US$1.65 billion. What was unusual about that was that Google already had a service, Google video, which provided exactly the same service as YouTube, allowing people to upload and view video files. Meanwhile, there were other sites that got left out in the cold while the creators of YouTube got rich. Websites with names like IFilm, Vimeo, Sharkle and ClipShack haven't been able to compete with YouTube even though their names are just as silly.

These "YouTube losers" fall into two categories: those that didn't get any money, and those that got considerably less than YouTube. DailyMotion, a French site that started up within a month of YouTube, acquired less than one-quarter of YouTube's traffic and didn't land a deal with any large company. VSocial.com, another video content provider, hasn't hit the jackpot either, but owner Mark Sigal is hopeful that it might happen eventually if he keeps plugging the site: "You have to take care of the downside and the upside will take care of itself." He doesn't elaborate on how much more of a downside VSocial.com will face before the upside kicks in.

Other sites have managed to cash in, but for a good deal less money and prestige than YouTube. Grouper.com was sold to Sony earlier this year for about half of what the YouTube owners got from Google, and nowhere near the publicity. "Sony buying Grouper was very big at the time," insists VP of products and marketing Jonathan Shambroom. But he admits "the YouTube number was so much bigger, and was even bigger news."

Many of these other sites are indistinguishable from YouTube, and some of them provide things that YouTube doesn't. DailyMotion offers better sound quality than YouTube, allowing users to upload videos in stereo. Sigal says that VSocial.com has tried to carve out a niche for itself as the business-friendly video site, where videos retain "logos, watermarks and links back to where the marketer wants consumers to return to when they click."

So why did YouTube explode into a cultural and business phenomenon when these other sites didn't? Shambroom thinks he has the answer: YouTube's creators "were vaulted into the public eye on the back of illegal content." In other words, no other video-sharing site was as willing as YouTube to turn a blind eye to illegal content. What turned it into the world's most popular video-sharer was a series of widely watched videos that the uploaders didn't have the legal right to put on the web, videos like "Lazy Sunday," the Saturday Night Live skit that was watched hundreds of thousands of times on YouTube before NBC found out about it.

YouTube did, and still does, take down a copyrighted video if the owner complains, but whereas other sites pre-screen videos to make sure they're not in violation of copyright, YouTube allows any video to be immediately processed and distributed. By the time the owner has it taken down for violations of the Digital Millennium Copyright Act, the site has already gotten lots of exposure. And though entertainment companies like Universal have entered into agreements with YouTube to post authorized TV and movie clips, they're still outweighed by the hundreds of other users still posting unauthorized clips every day.

When asked how Grouper's policy on illegal material differs from YouTube's, Shambroom says: "We follow the DMCA guidelines to the letter of the law. We're diligent about that." But YouTube would never have been such a hit if it had had a similarly diligent policy. Home videos and self-made movies may be fun for the uploader and his or her friends, but it's the copyright-busting movie and TV clips that Shambroom says are "the right type of content, that have mass appeal." That means that even though there are many sites just like YouTube, there's only one that provides easy access to the stuff that shouldn't be on the Internet at all.

Sigal remains hopeful that doing things the above-board way will pay off: "Our business is about providing tools and services that enable companies to build their own YouTubes and plug into the YouTube economy." But the YouTube economy doesn't seem to favour the people who play by the rules: the moral of this story is that if you follow the letter of the law, you'll probably lose out to those who don't.

See also INTERNET.

Maclean's November 6, 2006