This fall, Susan Wojcicki, the chief executive of YouTube, appeared on a panel at Vanity Fair’s inaugural technology conference in San Francisco. Sitting on the same stage at the Yerba Buena Center for the Arts where Steve Jobs once introduced the iPad to the world, she discussed the future of the media with Richard Plepler, the chief executive of HBO.
At one point, the moderator asked Ms. Wojcicki if she thought cable television would still be around in 10 years. She paused for a moment before answering, with a bit of a sly smile, “Maybe.” The crowd laughed, even though just about everyone in the packed auditorium knew she was only half-joking.
If cable TV is gone in a decade, Ms. Wojcicki and the global digital video empire over which she presides will be one of the main causes. YouTube, founded in 2005 as a do-it-yourself platform for video hobbyists — its original motto was “Broadcast Yourself” — now produces more hit programming than any Hollywood studio. (...)
Every day, one billion people around the world watch more than 300 million hours of videos on YouTube. In November, 83 percent of Internet users in the United States watched a video on YouTube, according to comScore.
Yet for all of its influence as a cultural force, YouTube is still finding its way as an economic one. Viewers may be migrating online in droves from traditional television, but the advertising dollars have not yet followed. The marketing research company eMarketer estimates that YouTube will log about $1.13 billion in ad revenue in 2014, a small fraction of the $200 billion global TV advertising market. CBS, for instance, brought in nearly $9 billion last year.
It’s not that corporations aren’t eager to advertise online; they’re desperate to reach the younger demographic that chooses digital video over cable or broadcast TV. But advertising on YouTube isn’t like advertising on television. Subscribers don’t translate neatly into viewers. Airtime on TV is finite. Airtime on YouTube is effectively unlimited — 300 hours of new content are uploaded to the site every minute — which suppresses the value of ads across the platform.
Above all, the quality of most YouTube programming is too unpolished to draw big investments from many blue-chip advertisers. “Despite YouTube’s size, a tiny fraction of it is what we call ‘TV replaceable,’ content where we would take TV money and swap it over to YouTube,” said one ad executive who spoke on condition of anonymity because he does business with YouTube. “It’s a funny thing to be sitting on top of something this massive and not really be able to totally control what you’re selling advertising against.”
YouTube creators, meanwhile, complain that the company takes too much of the ad revenue — as much as 49 percent — and does too little to market and promote its stars, which makes it hard for them to leverage their celebrity. The danger for YouTube is that it will become a kind of farm system, developing talent that is picked off by other distributors that are willing to make bigger investments in it. Netflix has already been trying to lure away YouTube creators, as has Vessel, a web video start-up founded by a former chief executive of Hulu.
Right now, YouTube’s red-and-white “play” button is everywhere; the site dominates online video. But competition for eyes and advertisers is coming from pretty much every direction. Not only are traditional TV networks like CBS and HBO moving content online, but digital media like Instagram and Twitter are increasing their video offerings. So is Facebook, with its vast numbers of users and global presence. Some of YouTube’s most popular channels feature people playing video games; to protect this franchise, Google, YouTube’s owner, recently tried to buy Twitch, an enormously successful video game streaming site. It was outbid by Amazon.
These are some of the known quantities. There are also unknown ones: the legions of young, tech-knowledgeable entrepreneurs who were raised on YouTube and think they can build something better. It’s worth remembering that the idea for YouTube was hatched at a dinner party in San Francisco less than 10 years ago. Just as abruptly as it changed how we watch TV, it could become the victim of disruption itself.
by Jonathan Mahler, NY Times | Read more:
At one point, the moderator asked Ms. Wojcicki if she thought cable television would still be around in 10 years. She paused for a moment before answering, with a bit of a sly smile, “Maybe.” The crowd laughed, even though just about everyone in the packed auditorium knew she was only half-joking.
If cable TV is gone in a decade, Ms. Wojcicki and the global digital video empire over which she presides will be one of the main causes. YouTube, founded in 2005 as a do-it-yourself platform for video hobbyists — its original motto was “Broadcast Yourself” — now produces more hit programming than any Hollywood studio. (...)Every day, one billion people around the world watch more than 300 million hours of videos on YouTube. In November, 83 percent of Internet users in the United States watched a video on YouTube, according to comScore.
Yet for all of its influence as a cultural force, YouTube is still finding its way as an economic one. Viewers may be migrating online in droves from traditional television, but the advertising dollars have not yet followed. The marketing research company eMarketer estimates that YouTube will log about $1.13 billion in ad revenue in 2014, a small fraction of the $200 billion global TV advertising market. CBS, for instance, brought in nearly $9 billion last year.
It’s not that corporations aren’t eager to advertise online; they’re desperate to reach the younger demographic that chooses digital video over cable or broadcast TV. But advertising on YouTube isn’t like advertising on television. Subscribers don’t translate neatly into viewers. Airtime on TV is finite. Airtime on YouTube is effectively unlimited — 300 hours of new content are uploaded to the site every minute — which suppresses the value of ads across the platform.
Above all, the quality of most YouTube programming is too unpolished to draw big investments from many blue-chip advertisers. “Despite YouTube’s size, a tiny fraction of it is what we call ‘TV replaceable,’ content where we would take TV money and swap it over to YouTube,” said one ad executive who spoke on condition of anonymity because he does business with YouTube. “It’s a funny thing to be sitting on top of something this massive and not really be able to totally control what you’re selling advertising against.”
YouTube creators, meanwhile, complain that the company takes too much of the ad revenue — as much as 49 percent — and does too little to market and promote its stars, which makes it hard for them to leverage their celebrity. The danger for YouTube is that it will become a kind of farm system, developing talent that is picked off by other distributors that are willing to make bigger investments in it. Netflix has already been trying to lure away YouTube creators, as has Vessel, a web video start-up founded by a former chief executive of Hulu.
Right now, YouTube’s red-and-white “play” button is everywhere; the site dominates online video. But competition for eyes and advertisers is coming from pretty much every direction. Not only are traditional TV networks like CBS and HBO moving content online, but digital media like Instagram and Twitter are increasing their video offerings. So is Facebook, with its vast numbers of users and global presence. Some of YouTube’s most popular channels feature people playing video games; to protect this franchise, Google, YouTube’s owner, recently tried to buy Twitch, an enormously successful video game streaming site. It was outbid by Amazon.
These are some of the known quantities. There are also unknown ones: the legions of young, tech-knowledgeable entrepreneurs who were raised on YouTube and think they can build something better. It’s worth remembering that the idea for YouTube was hatched at a dinner party in San Francisco less than 10 years ago. Just as abruptly as it changed how we watch TV, it could become the victim of disruption itself.
by Jonathan Mahler, NY Times | Read more:
Image: YouTube
