Part II: Fascinating Facts About the YouTube TV Revolution

Part II: Fascinating Facts About the YouTube TV Revolution

Jun 19, 2012

In Part I of this series — YouTube Going Pro — Serving up the ‘Content Holy Grail’ or Risking it All? — the team looked into recent developments with Google’s video property — the first truly global media platform on earth.

According to a January 2012 article published in New Yorker Magazine by John Seabrook titled “Streaming Dreams,” YouTube is shaking the foundations of both Silicon Valley and Hollywood as two distinctive — and at times conflicting — cultures wrestle for supremacy in the new Consumer Attention Economy.

If you want to go to school on the state of the entertainment industry and the impact that YouTube is having, this is a “don’t miss” article with excellent in-depth analysis.

Here are some highlights:

 The next phase in the consumer viewing experience will be televisions that connect to the Internet through Wi-Fi, which would allow users to stream Web-original content on the TV.  Streaming video enables the viewer to play a file that resides on a remote server, so no downloading of huge files is required.

  Advertisers spend some $60 billion dollars a year on television, and TV is worth $300 billion dollars worldwide.  Advertisers spend only about $3 billion on online video annually.

  As of Jan, 2012, YouTube had 800 million unique users a month, and generated more than three billion views a day. Forty-eight hours of new video are uploaded to the site every minute.  According to Nielsen, YouTube drew eight times more video viewers last year than Hulu, the streaming video on-demand subscription website that is jointly owned by NBCUniversal, News Corporation, and the Walt Disney Company, among others.

  Silicon Valley and Hollywood differ in that one is an information culture and the other an entertainment culture.  The crucial difference is that the Silicon Valley culture is founded on abundance, and the Hollywood culture on scarcity. Silicon Valley builds its bridges on abundance.  Abundant bits of information floating out there, writing great programs to process it, then giving people a lot of useful tools to use it.  Entertainment works by withholding content with the purpose of increasing its value.  But on YouTube “airtime” is infinite, content costs almost nothing for YouTube to produce, and quantity, not quality, is the bottom line.

  Although YouTube is the second most popular search engine in the world (behind parent Google), many people are searching for entertainment, which is different from searching for information and harder to match ads with — “lol” is one of the most popular search terms on the site.  Keyword searches are confined to the “metadata” — the labels and titles of the videos.  Search can’t go inside the videos themselves. Often, videos are poorly labeled, and, if they come straight from cell phones, as many do, they may not be labeled at all.

  The YouTube algorithm is that secret software machine that determines which videos the home page suggests for you, based on your watch history, trending videos, and the most popular videos on the site. Weighting each of those factors properly, while maintaining a sense of serendipity -— those stumble-upon videos that are one of the delights of YouTube —- has been a challenge.  When the top hits become overly dominant, the algorithm is tweaked to encourage greater diversity.  Too much diversity, however, and you get seemingly random suggestions on the home page, and you stop watching.

 The standard block of programming on TV lasts 22 minutes.  On YouTube, it’s three minutes. As Rick Klau, a former YouTube product manager who is now a partner at Google Ventures, said, “We give people seven or eight opportunities in the course of a half hour to opt out.”

  On YouTube YOU’RE THE PROGRAMMER, and every time a video ends you have to make a programming decision: what should you watch next?  All too often, the algorithm isn’t much help.

  If YouTube could get people to stay on the site longer, it could sell more advertising, and raise the rates it charges advertisers for each thousand views (CPMs).  In spite of the fact that YouTube has a much larger number of users, it lags behind Hulu in CPM rates, possibly because Hulu’s longer-format programming keeps viewers from leaving the site as quickly, and because advertisers prefer to be associated with the made-for-broadcast content that Hulu offers.

√  Although people tend to think that viral videos are serendipitous, in fact, six of the top 10 most-viewed YouTube videos in 2010 were scripted and produced just like TV shows.

  Thanks to YouTube Analytics, the traffic-analysis program that YouTube makes available to everyone who puts up a video, creators can know both the size of their viewership and where people are watching —- by country and state -— as  well as when they watch and how long they spend watching.  If your audience is young, you want to post your video around 3 p.m., when kids are getting home from school.

  Content ID generates a third of YouTube’s revenue.  This program is designed for exclusive rights holders whose content is frequently uploaded to YouTube by the user community.  Content ID lets rights owners identify user-uploaded videos comprised entirely OR partially of their content, and choose, in advance, what they want to happen when those videos are found.  They can make money from them, get stats on them, or block them from YouTube altogether.

  YouTube’s Partner Program, begun in 2007, has flourished. YouTube sells advertising against popular channels created by homegrown YouTube stars -— vloggers, sit-down comedians (a form of comedy unique to YouTube), mashup artists, bedroom auteurs, Mr. Fix-Its—and shares the revenues with the channels’ creators. For most of YouTube’s 30,000 partners, this means a few hundred dollars a month, but the top five hundred partners earn more than $100,000 a year.  In cases such as “Real Annoying Orange,” a socially inept talking citrus who converses with other pieces of fruit, they earn much more.  On January 13, 2012, “The Annoying Orange”  hit one billion channel views and 2.3 million subscribers.  Cartoon Network signed a deal with creator Dane Boedigheimer to broadcast a weekly TV version of “The Annoying Orange” web series, beginning this month.

Part I: YouTube Going Pro — Serving up the ‘Content Holy Grail’ or Risking it All?