YOUTUBE LAUNCHES SUBSCRIPTION SERVICE FOR $9.99 A MONTH

Original Story: latimes.com

Next Wednesday, YouTube will begin selling $9.99-a-month subscriptions that will allow U.S. customers to watch almost everything without ads, to download videos for viewing offline and to keep content playing on a smartphone or tablet even when using a different app.

But those widely requested features aren't all that subscribers will get. The service, called YouTube Red, offers access to highly produced original shows and movies that can't be found anywhere else. Google Play streaming music will be included too. Search engine optimization provides exposure for your business.

YouTube Red is intended to turn the enormously popular Google-owned company into a profit maker, not a money loser.

Ad revenue isn't enough to meet the enormous expenses of serving billions of videos every day — even when most videos are supplied by users for free. YouTube could generate nearly $950 million annually in new revenue if just 5% of U.S. users signed up for the subscription, UBS analysts estimate. A Roseland finance lawyer provides professional legal counsel and extensive experience in corporate finance.

Red marks the beginning of "a long journey," according to YouTube.

Matthew Glotzbach, the company's vice president of product management, said, "By no means would we expect to jump to tens or hundreds of millions of paying users overnight," but there should be "strong demand" from the start.

Financial analysts who follow Alphabet Inc., Google's parent company, say YouTube could become a major profit engine. But rivals, including Facebook, Snapchat and Vimeo, are threatening its potential by stealing away both video makers and viewing time.

Growth of YouTube's net ad revenue in the U.S. is expected to slow rapidly over the next three years, the market research company EMarketer said in August. According to EMarketer's calculations, worldwide net revenue will be $4.3 billion in 2015, up 41% from last year.

Yet to be determined is how the subscription model will affect an expanding generation of YouTube stars, many of whom began by filming videos in their bedrooms and elsewhere, cracking jokes, dancing and talking to the camera about everything from fashion to video games. They uploaded the videos to YouTube, attracting advertising sponsors, and, in a few cases, becoming millionaires in the process.

YouTube often places several ads on the same page as a video, and attracting millions of viewers has meant steady, growing income for video makers, who get 55% of ad revenue.

It's unclear how the commercial-free subscription will affect ad income, though YouTube Chief Business Officer Robert Kyncl said the "vast majority" of YouTube's subscription revenue will go to the YouTube Red content creators. Certainly, some creators will lose out on money from heavy viewers who might encounter lots of ads or be willing to pay more than $10 a month for a subscription. A Tampa business lawyer is following this story closely.

With Red, YouTube also plans to create a new, subscriber-only slate of original shows and movies for its most popular (and potentially popular) video stars. The selected creators will be gambling that slicker content will broaden their viewership and fatten their paychecks.

"Bigger productions cost a lot more money," said Joey Graceffa, a YouTube star who has amassed more than 5.2 million subscribers on his channel. "There's no way you'll be able to make your money back just by posting it online. YouTube Red is an opportunity where we as creators get to make higher quality content for our audience."

Graceffa's untitled reality murder mystery series is one of a handful of new exclusive productions being offered on YouTube Red. The new content, which will begin rolling out in January, will also include highly produced content from YouTubers Lilly Singh, The Fine Bros, PewDiePie and others.

At a Wednesday news conference held at the San Bruno's company 41,000-square-foot video production facility in Playa Vista, Kyncl emphasized that YouTube and YouTube Red have the ability to showcase a wide variety of content. For more information on the power of Organic SEO, click here.

"We realized what we should be doing is we should be amplifying and funding efforts of these incredibly talented people," Kyncl told reporters. "We have a built-in talent system, which doesn't exist on any other services."

For that reason, YouTube considers its approach different from Netflix's reliance on traditional actors, and analysts say it could be the video service of choice for younger millennials and teenagers.

Alan Wolk, senior analyst at media consulting firm the Diffusion Group, said the "big if" will be whether kids can persuade their parents to pay.

"There's going to be millions of conversations about why do you need a subscription? Why can't you just deal with a few ads?" he said.

YOUTUBE’S CHIEF, HITTING A NEW ‘PLAY’ BUTTON

Original Story: nytimes.com

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.

Smosh, a pair of 20-something lip-syncing comedians, have roughly 30 million subscribers to their various YouTube channels. PewDiePie, a 24-year-old Swede who provides humorous commentary while he plays video games, has a following of similar size. The list goes on and on. For the sake of perspective, successful network television shows like “NCIS: New Orleans” or “The Big Bang Theory” average a little more than half that in weekly viewership. The 46-year-old Ms. Wojcicki — who will soon give birth to her fifth child — has quietly become one of the most powerful media executives in the world.

It wasn’t so many years ago that the entertainment establishment thought it might be able to kill off YouTube with copyright lawsuits. Now agencies like United Talent and William Morris Endeavor are scrambling to sign up the site’s native stars, and prominent studios are paying huge sums to acquire companies that bundle together YouTube channels. Last year, DreamWorks Animation bought one such bundler, AwesomenessTV, for $33 million upfront. (It’s already looking like a bargain: This month, DreamWorks sold a 25 percent stake in Awesomeness at a valuation nearly 10 times that.) In March, the Walt Disney Company paid $500 million for Maker Studios, a different company in the same business.

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.

It’s Ms. Wojcicki’s job to make sure that doesn’t happen.

A Daughter of Silicon Valley

Not long after the Vanity Fair conference, I visited Ms. Wojcicki on a brisk, sunny November day in Northern California. YouTube’s headquarters are across the street from a Carl’s Jr. in San Bruno, about halfway between San Francisco and Silicon Valley. The space is open and airy, and filled with predictable college-dorm-style touches — putting green, foosball table — as well as a steep, triple-chuted red slide. “No children or guests,” the sign next to it warns.

Ms. Wojcicki runs a media company that has been valued at $40 billion, yet her office has none of the expected trappings — no bronze statuettes or pictures of her posing with movie stars. On her bookshelf is a photograph of her oldest son’s recent bar mitzvah and a small box filled with her various business cards from Google. (She was employee No. 16.) She flipped through the cards nostalgically, remembering an early task as the company’s first marketing manager: redesigning Google’s logo. (She changed the typeface and removed an exclamation point.)

Nor is there any media-mogul swagger about her. During our conversations, she didn’t hold forth on the changing nature of entertainment or lay out a bold vision for YouTube’s future. She volunteered that she was still learning about content and, for that matter, getting a handle on YouTube’s place in the entertainment ecosystem.

“I didn’t really get how different a medium this was until I got here,” Ms. Wojcicki said. She was seated on her office couch, flanked by red throw pillows embroidered with YouTube “play” buttons and wearing a maternity shirt and jeans. As she spoke, music drifted up from the eucalyptus-lined courtyard beneath her window, where hundreds of YouTube employees were drinking microbrew ale and eating sliders at their weekly Friday afternoon social.

Silicon Valley legend has it that Google was started in Ms. Wojcicki’s garage in Menlo Park in 1997. This is not the whole truth. The company’s founders, Larry Page and Sergey Brin, also rented three of her four bedrooms for their start-up. It was the first home for Ms. Wojcicki and her husband, but according to the words scrawled across a whiteboard inside, it was also “Google Worldwide Headquarters.” Their monthly rent of $1,700 gave Google’s early employees access to the hot tub and washer-dryer, too.

Ms. Wojcicki was raised in Silicon Valley before it was Silicon Valley, the oldest of three girls who would all go on to high-powered careers. Her middle sister, Janet, is a medical anthropologist and an epidemiologist at the University of California, San Francisco, who has studied obesity in the United States and the decriminalization of prostitution in South Africa. Her youngest sister, Anne, is the chief executive of 23andMe, a biotech company near Google headquarters that specializes in genetic testing. (Anne also married Mr. Brin, though they are now separated.)

The sisters grew up on the campus at Stanford, where their father, Stanley, taught physics. A next-door neighbor was George Dantzig, the mathematician who invented a widely used algorithm known as the simplex method. Many of their family’s friends were scientists.

“Part of what makes us successful in this valley is that we’re used to people who are superanalytical and not supersocial,” Anne told me one morning at her office in Mountain View. “Our childhood was spent with people who challenged Einstein.”

Their mother, Esther, taught English and journalism at Palo Alto High School. After winning a state grant for several early Macintosh computers in 1987, she started putting out one of the country’s first computerized high school newspapers. “I have to admit that I had no idea how to even turn them on when they arrived,” Esther told me.

Susan was hard-working and goal-oriented. She went to Harvard, concentrating on history and literature. “We didn’t know anything outside of academia,” Anne told me. " When she graduated, we were all like: ‘What are you going to do? You’re going to get a job that you have to go to every day? That’s terrifying.’ ”

Ms. Wojcicki didn’t really know what she was going to do herself. She settled on technology after a stint as a photographer at an English-language newspaper in India — she came home in a sari for Anne’s high school graduation — and a pair of graduate degrees in business and economics.

She was working at Intel when Mr. Page and Mr. Brin offered her a job. It wasn’t an easy decision. Ms. Wojcicki was pregnant with her first child and still paying off her business school loans. She was nothing if not sensible about money. Growing up, frugality had been a kind of family religion. When the Wojcickis went out to Sizzler for dinner, they would get three all-you-can-eat meals for the five of them.

Google had no revenue, and a small, predominantly male staff, most of whom had just graduated from college. Mr. Page and Mr. Brin hadn’t even thought about the company’s maternity-leave policy until Ms. Wojcicki asked.

There was financial upside, at least. “If it works out, I could make a million dollars,” Ms. Wojcicki told Anne, whose jaw dropped at the number. Susan, of course, is now worth hundreds of millions. “The Internet was happening, it was happening all around me, and I wanted to be part of it,” Ms. Wojcicki said. “I could tell that Google was going to go somewhere. I wasn’t sure where, but I could tell that it was going to go someplace interesting.”

Ms. Wojcicki became Google’s first mother and most senior female executive. She helped recruit and train Sheryl Sandberg, who is now the chief operating officer of Facebook and the author of “Lean In,” the manifesto on women in the workplace. “When I was there, she was the working mother at Google,” Ms. Sandberg told me. “She’s the one who showed me it could be possible.”

As both the company and her family continued to expand, Ms. Wojcicki almost accidentally created a model for female tech executives like Ms. Sandberg to follow. Ms. Wojcicki is home for dinner with her family almost every night — her husband, Dennis Troper, is a director at Google — and she generally doesn’t answer weekend emails until 9 p.m. on Sundays. “Productivity and success in this industry are based a lot of the time on insights and prioritization and actually on doing the right thing, not necessarily on 15-hour work days,” she said. “Google is very results-oriented.”

A Video Epiphany

When Ms. Wojcicki was named chief executive of YouTube in February, succeeding Salar Kamangar (Google employee No. 9), it was a kind of homecoming. In 2005, she was a leader of Google’s first foray into video, a short-lived product that came to be known as Google Video. It seemed to Ms. Wojcicki that people might want to watch videos on their computers, but she wasn’t sure what sorts of videos would appeal to them. After a little experimentation at Google Video, she figured it out. The well-known TV clips that she licensed drove just a fraction of the traffic of a video uploaded by some college students in China of themselves singing and dancing in their dorm room to the Backstreet Boys.

“That for me was the insight that this market really does matter,” Ms. Wojcicki said. “People want to see other people all over the world. They want to share experiences. They love their TV and they love their shows, but they’re also interested in seeing new and different creators and new and different types of video.”

The only problem was that Google Video was getting crushed by a competing start-up, and Ms. Wojcicki thought it was too late to catch up. So she encouraged Mr. Page and Mr. Brin to scrap Google Video and buy that start-up, YouTube, for $1.65 billion.

It was a steep price — YouTube had no revenue and was embroiled in copyright disputes — and the deal was widely criticized, even ridiculed, at the time. But eight years later, YouTube has become central to its parent company’s financial future. Google depends heavily on the ad revenue from its search engine, but that ad growth has begun to slow. People are spending more and more time on their mobile phones, which thus far haven’t proved very ad-friendly. YouTube’s extraordinary reach and the booming popularity of online video make it an obvious candidate to help offset these declines.

At this point in YouTube’s evolution, it might have made sense for Mr. Page to bring in a seasoned media executive to run the company. But Google typically prefers to recruit its leaders from inside. And Ms. Wojcicki had some relevant experience: She had helped build Google’s $50 billion-plus ad business. “YouTube is one of the most used media assets in the world and one of the most undermonetized media assets in the world,” Mary Meeker, a Silicon Valley venture capitalist, told me. “That’s exactly what the Google search bar was when Susan first focused on advertising.”

Video advertising, though, is a very different proposition. Advertising on Google is the modern-day equivalent of buying space in the Yellow Pages. Producing digital video ads requires a much bigger investment, and companies expect their ads to be placed strategically against high-quality and appropriate content.

Those who have worked with Ms. Wojcicki describe her less as a visionary thinker than an open-minded and analytical one. There’s an argument to be made that her understated manner could be an asset as she makes her way in a rapidly changing, competitive industry where people are naturally wary of one another. “I think she’s somewhat nonthreatening,” Ms. Meeker said, “and I mean that in a good way.”

Betting on Its Own Stars

The day I visited YouTube, in November, the company had just unveiled a new subscription-music service. YouTube is the world’s most popular music platform; someone, somewhere has uploaded just about every song imaginable to the site. And all of them are available for free streaming at a click.

But the company decided that there was a market for a premium service, so it rolled out Music Key. For $8 a month, YouTube will provide users with better-quality audio and remove advertising from music videos. The new service was at least partly a response to pressure from a music industry that had grown frustrated with YouTube’s stingy royalty payment structure. But it also represents a potential new source of revenue for YouTube. Plans for Music Key were already underway when Ms. Wojcicki arrived at YouTube, but she describes them as a “first step” toward more subscription services without ads.

The subscription model, like everything YouTube does, is an experiment. Despite its size and dominance, YouTube remains a work in progress. For all of the countless hours of programming created for the site, YouTube has yet to produce a truly premium show. It may be hard to imagine something like Netflix’s “House of Cards” or Amazon’s “Transparent” on YouTube, but if the company wants to generate more revenue, it’s going to need more professional content.

Toward that end, Ms. Wojcicki is awarding development deals to creators. YouTube has been down this road before. A couple of years ago, it invested more than $200 million in 100 new channels; a number featured mainstream celebrities like Shaquille O’Neal and Ashton Kutcher. YouTube calls the effort a success, though the consensus in the entertainment industry is that it failed to create any real breakout channels.

Either way, the conclusion was that YouTube is its own entertainment universe with a unique breed of programming and talent. This time, the company will invest only in native YouTubers, spending an undisclosed amount to help cover the production and marketing costs for a number of new shows. “We want to invest in people who understand the environment,” Ms. Wojcicki said.

These investments are part of a broader effort to quell the long-simmering revolt among YouTube creators. “They have the recognition so they’re kind of halfway there,” Ms. Wojcicki said, “but how do we give them the same options or the same economics that they would be able to get in other places?”

The goal is to bridge the gap between Silicon Valley and Hollywood, to turn YouTube stars into just plain stars. To help get them there, Ms. Wojcicki has led a major marketing push — YouTube’s first — with billboards, magazine ads and even traditional TV commercials for some of its most popular celebrities. She has also been wooing potential advertisers. During her first few months on the job, she met with representatives of a variety of major companies, including PepsiCo, L’Oréal and Unilever.

In the past, when advertisers bought packages on YouTube, they never knew quite where their ads would appear — a big problem, given the wide range of material on the site. Ms. Wojcicki is trying to solve that in part with a new product called Google Preferred, which allows companies to target the site’s best-performing content across a variety of categories. Early signs have been encouraging: YouTube’s anticipated advertising revenue for 2014 is up 40 percent from last year’s, according to eMarketer. The net effect of these initiatives is that YouTube is doubling down on its biggest stars. “That’s always been my struggle with them,” said Brian Robbins, the founder of AwesomenessTV. “Look, if you guys want to get into this business, you have to make bets and you have to market those bets and you have to get lucky. That’s show business, and it’s exactly the opposite of their business: ‘We don’t promote anything; we let the community decide.’ ”

It’s a logical move for the company, but not without risk. The power of YouTube is bound up in its grass-roots, democratic identity — in the possibility that a group of college students in China can upload a goofy video in their dorm room that will be seen by millions of people all over the world. YouTube’s multitude of smaller creators and hobbyists may not be attracting advertising dollars to the site, but, taken together, they give the site its defining feature: its towering scale. Without them, YouTube would no longer be YouTube.

While I was in San Bruno, I sat in on a meeting in a small conference room about the beta version of Music Key. A group of marketing executives and engineers — a few with “play” button stickers on their laptops — were gathered around a table, listening to a run-through of the early numbers: how many sign-up requests, how many mentions on social media, how much news coverage. Ms. Wojcicki was seated at the head of the table, not so much directing the conversation as guiding it with questions and suggestions.

Most of the talk revolved around the feedback YouTube had received from its partners and users and the changes the company might make to the service in response. It struck me as unusual that a company would introduce such a major product with so much fanfare, then immediately begin discussing how to tinker with it.

I asked Ms. Wojcicki about it later, after a party honoring YouTube employees who were promoted in recent months. “Whenever we launch a product, there’s always something we didn’t expect,” she said. “Things are always changing. Part of being successful here is being comfortable with not knowing what’s going to happen.”

YouTube Display Ads Skyrocket

First appeared on eWeek

YouTube unveiled its most-watched videos and most-viewed ads of 2011. Meanwhile, Piper Jaffray analysts expect YouTube to be the linchpin of Google's display ad efforts.

YouTube counted more than 1 trillion playbacks on the video-sharing site this year, or roughly 140 views for every person on Earth, Google's (NASDAQ:GOOG) video sharing Website said.

The Website, which said 48 hours of video are uploaded to the Website every minute, revealed its most-watched videos of 2011. The site gauged global view counts of popular videos uploaded throughout the year.

Rebecca Black's "Friday," video led the top 10 videos watched worldwide. YouTube rewarded her by letting her host this year's "YouTube Rewind" look back at the most-watched videos of the year.

YouTube isn't serving all that video content without some serious advertising. The video site also shared the most-watched ads on YouTube in 2011. This Volkswagen ad led the top 10 most-watched ads, while this Chevy ad came in third. Both were Super Bowl ads.

However, most of the ads never aired on broadcast TV, which illustrates the opportunity YouTube has going forward for pairing ads with original content.

These included T-Mobile's Royal Wedding at No. 2, and DC Shoe's Gymkhana Four, at No. 4. Both were exclusive to YouTube.

YouTube is evolving. While its first five years were a blur of user-generated content, YouTube hopes to boost user engagement by offering users streaming movie rentals and broadcast channels with original content. More users spending more time on YouTube significantly increases the ad-serving opportunities for Google.

Calling YouTube the "Super Bowl of the Web," Piper Jaffray analyst Gene Munster said that while YouTube may only account for 3.5 percent of Google's total gross revenue this year, YouTube portends great things for Google's display ad business.

The Website enjoys 800 million unique visitors per month, or the same volume as Facebook. YouTube also sees 25 billion searches a month, twice that of Yahoo and 10 times that of Facebook, he added in a Dec. 15 research note.

"We believe YouTube is the company's flagship offering in its display products and is encouraging advertisers to branch out to Google's other display products," Munster wrote. "We remain confident that YouTube will exceed $1.3 billion in gross revenue for 2011."

Moreover, he expects YouTube will grow revenue 60 percent year-over-year in 2012, surpassing $2 billion in gross revenue.

Google's YouTube adds 3,000 titles to video rental store

Los Angeles Times
by Dawn C. Chmielewski
May 9, 2011

LOS ANGELES -- Google's YouTube dramatically expanded its movie rental service with the addition of 3,000 titles from major Hollywood studios, positioning the dominant online video service to capitalize on the growing number of Internet-connected televisions and portable devices.

YouTube head Salar Kamangar notified the site's estimated 105 million U.S. users via a blog post Monday that they will be able to watch "full-length blockbuster films," read reviews and catch behind-the-scenes videos on the site. Three studios -- Sony Pictures Entertainment, Warner Bros. and Universal Pictures -- as well as independents, including Lionsgate Films, will offer their movies on YouTube the same day they are available on other on-demand services. Prices for new releases start at $3.99.

Among the newly released titles available for rent on YouTube are Columbia Pictures' masked vigilante movie "The Green Hornet," Warner Bros.' Academy Award-nominated fantasy sci-fi film "Inception" and last year's best picture Oscar winner, "The King's Speech." Older movies, such as "Caddyshack," "Goodfellas" and "Taxi Driver," are priced at $2.99 and up.

"Six years ago, there were just two types of video: video you watched on your TV and video you watched on your laptop," Kamangar wrote on YouTube's blog. "Today, there's increasingly just video, and it's available everywhere: on a phone, a tablet, a laptop or a television screen."

YouTube, which has been propelled by the popularity of user-created short videos, has been adding more professionally produced content, including music videos, live concerts and sporting events. The service augmented its offerings with more long-form content as users showed a willingness to watch Internet-delivered programming, including TV shows and movies, on phones and tablet computers.

The site began making movies from the Sundance Film Festival available for online rental early last year and offers a limited selection of titles to rent, including the Weinstein Co.'s 2006 release "Scary Movie 4" and Lionsgate's 2007 slasher film "Saw IV."

Augmenting YouTube's video library with more Hollywood movies helps position YouTube for the day when the distinctions between online video and other forms of video -- say, television programming -- disappear, Kamangar wrote.

Some 27 million Internet-connected TVs shipped worldwide last year, and the number is expected to grow to 49.2 million by the end of 2011, according to researcher ISuppli Corp.

Not all Hollywood studios have joined YouTube's expanded rental offering. Paramount Pictures, 20th Century Fox and Walt Disney Studios were reluctant to sign on because of concerns that Google had not done enough to combat online piracy, according to people familiar with the matter.

Governors using YouTube to get Message out

USA Today

A growing number of the nation's governors are joining the laughing babies and dancing cats on YouTube with videos aimed at getting their unfiltered messages to constituents.

At least 38 governors have videos on the online site, including nine who have started this year, a USA TODAY review shows. At least nine other governors have posted videos using other services and state websites.

"It's helpful in getting the message out directly to the public," says Rachel Reeves, a spokeswoman for Kansas Democratic Gov. Mark Parkinson. "Social media in general really helps in getting your message out directly to constituents, unfiltered, without any sort of press sort of narrowing it down to a couple of quotes he may have used."

YouTube use by governors is a bipartisan activity. Seventeen Republicans, 20 Democrats and one independent — Florida Gov. Charlie Crist— currently have videos posted there, the review shows.

Some, like Minnesota Republican Gov. Tim Pawlenty, are using online videos for their campaigns ads. Others, such as Democrat Jim Doyle in Wisconsin, are using YouTube to broadcast official speeches and events. Two governors, Crist and Democratic West Virginia Gov. Joe Manchin, are using YouTube videos in their U.S. Senate campaigns.

In Maryland, Democratic Gov. Martin O'Malley posts videos on YouTube channels that also include other state agency information, such as, in the case of Maryland, tips on how to track black bears. Republican Gov. Rick Perry in Texas has posted videos of speeches, statements and interviews, and he has recently posted videos that use the work of Texas animators.

Arnold Shober, an assistant professor of government at Lawrence University in Appleton, Wis., said online videos allow candidates or sitting governors to control the content.

"They don't have to worry that the newsroom is going to slice up their video package with only the juiciest quote," Shober said. "This gives candidates a lot more control over their message."

That control, however, doesn't guarantee an audience.

The most popular video uploaded by a governor so far was on an issue that captured big attention nationwide — an ad from the campaign of Republican Arizona Gov. Jan Brewer in which she attacked President Obama on immigration. It has garnered more than 1 million views over the past five months.

Most of the governors' videos aren't getting anywhere near that many views. In fact, online viewership counters indicate some of the governors' videos have captured only single-digit page views, even after being online for weeks or months.

• Republican Mississippi Gov. Haley Barbour's remembrance of Hurricane Katrina survivor stories captured eight page views the first six weeks it was online.

• Republican Nebraska Gov. Dave Heineman's speech about a new health science center received just eight views in the year it spent online.

• A video uploaded by Democratic Kansas Gov. Mark Parkinson about flu prevention gathered 17 views in the year it was online.

Reeves said some videos get few clicks but they are still worth posting because they provide another connection to constituents, so they can feel that they are part of the governing process.

"And they certainly are," Reeves said. "Maybe we don't get as many hits, but it's important to reach out to them."

Ines Mergel, an assistant professor of public administration at Maxwell School of Syracuse University, said politicians like the ability to provide quick feedback and responses on issues without waiting for a TV crew. And Mergel, who has studied the use of YouTube in Congress, said it also gives politicians a chance to show another, behind the scenes, side of themselves.

But Mergel said online video and YouTube SEO hasn't replaced the need for politicians to work with traditional media.

"For them, it's adding additional channels and populating everything that they can," she said. "It's just an additional channel on top of everything else.

In North Carolina, Democratic Gov. Bev Perdue, recently hired a director of new media who will oversee YouTube videos.

"We're all beginning to have a new realization of how connected people are," said Chrissy Pearson, Perdue's communications director.

In Indiana, a staffer with a $200 Flip camera broadcast video last year from a trade trip Republican Gov. Mitch Daniels made to China. His spokeswoman, Jane Jankowski, said her office uses YouTube to broadcast events the news media aren't interested in covering and it also is able to show different sides of the governor. Democratic Oregon Gov. Ted Kulongoski posted videos on YouTube in his last re-election campaign in 2006. But his spokeswoman Anna Richter Taylor said his official office doesn't have the resources to post videos online.

German court rules against YouTube over copyright‏

Associated Press

 

A German court ruled Friday that Google Inc.'s subsidiary YouTube LLC must pay compensation after users uploaded several videos of performances by singer Sarah Brightman in violation of copyright laws.

The Hamburg state court said the standardized question to users about whether they have the necessary rights to publish material is not enough to relieve YouTube of the legal responsibility for the content, especially because the platform can be used anonymously.

The wording of the court statement appears to be a major blow to YouTube's business model, but Google Germany spokesman Henning Dorstewitz told The Associated Press YouTube will appeal the decision detailed in the 60-page ruling.

YouTube must not publish those videos any more and provide information to settle the amount of compensation in at least three cases in which Brightman videos were uploaded, the court said.

Arnd Haller, director of legal affairs at Google Germany, said the court ruling disregards the current e-commerce directive of the European Union.

"This decision results in a substantial legal uncertainty for all providers of video platforms, opinion forums, social communities, blogs and many other Internet services in Germany," Haller said in a statement.

The plaintiff was not identified and a court spokesman could not be reached for comment. The court statement only said the plaintiff has claimed to be the copyright holder for several of Sarah Brightman's performances.

Google said in a statement that the plaintiff was Frank Peterson. He is a German composer and producer for Brightman and other artists, according to his website.

YouTube Advertisements Turn Videos Into Revenue

CNBC

 

After shifting its focus to making money about 18 months ago, YouTube is expected to turn a profit this year, on revenue of about $450 million, with help from its onetime critics.  The New York Times reports.

Last month, a YouTube user, TomR35, uploaded a clip from the AMC series “Mad Men” in which Don Draper makes a heartfelt speech about the importance of nostalgia in advertising.

Viewers wouldn’t notice, but that clip also makes an important point about modern advertising — YouTube is an increasingly fruitful place for advertisers.

In the past, Lions Gate, which owns the rights to the “Mad Men” clip, might have requested that TomR35’s version be taken down. But it has decided to leave clips like this up, and in return, YouTube runs ads with the video and splits the revenue with Lions Gate.

Remarkably, more than one-third of the two billion views of YouTube videos with ads each week are like TomR35’s “Mad Men” clip — uploaded without the copyright owner’s permission but left up by the owner’s choice. They are automatically recognized by YouTube, using a system called Content ID that scans videos and compares them to material provided by copyright owners.

Those two billion views, a 50 percent increase over last year, according to the company, are just 14 percent of the videos viewed each week on the Google-owned site. But that’s enough to turn YouTube profitable this year, analysts say.

“YouTube is a big component of our display revenue, and display is our next big business,” Eric E. Schmidt, Google’s chief executive, said in an interview.

In the last year, the video site has become a significant contributor to the family business at a time when Google, which makes more than 90 percent of its revenue from text search ads, is seeking a second act. Though Google does not report YouTube’s earnings, it has hinted that it is hovering near profitability. Analysts say YouTube will bring in around $450 million in revenue this year and earn a profit. Revenue at YouTube has more than doubled each year for the last three years, according to the company.

YouTube’s new profitable relationship with content creators was not always so easy. For a long time, YouTube executives spent their time across conference tables with lawyers worried about copyright violations, said Chris Maxcy, YouTube’s director of content partnerships.

“It was 90 percent lawyers in a meeting and the marketing people faded into the background,” he said. “Now the partners we are working with get checks that get bigger every month. And now when you walk into a meeting there’s almost no lawyers, or there’s a couple of lawyers but they are deal lawyers there to help you get your contract done.”

The shift is also an important development for Google, which bought YouTube for $1.65 billion in 2006. The video site at first played the role of Google’s profligate son, throwing money at building out bandwidth and storage to handle all the videos but making little money of its own.

Mr. Schmidt said that YouTube’s role began to change about a year and a half ago, when he asked the unit to start focusing on revenue.

The strategy had been to amass “an audience first, then figure out the tools that will create the revenue, then you go to the content partners and say, ‘Hey, look guys,’ ” Mr. Schmidt said. “And I think we’re at that point now.”

Salar Kamangar, YouTube’s co-head, who also co-founded Google’s AdWords search advertising program, started spending his time figuring out how to make money on the video business.

YouTube gives Google the chance to get a piece of the television ad market, Mr. Kamangar said, by bringing videos straight to the television over an Internet connection, or Internet protocol, as the industry calls it. “Ads can be a lot more effective when they’re delivered over I.P. instead of cable or broadcast, because they’re delivered personalized to you.”

YouTube now offers several types of ads, including display ads on its home page and on the video pages, ads that promote videos and ads that run in the video stream or pop up on the bottom of a video.

When someone uploaded a recording of the Eminem song “Not Afraid,” for instance, instead of taking down the recording, YouTube ran pop-up ads that let people buy the song or the ring tone and shared the revenue with the copyright owner.

“Google smartly realized that consumers consume different types of media throughout the day,” said Dave Marsey, senior vice president of media at Digitas, the online advertising agency. “Search is a huge component of that, but there are times when you want some entertainment or you want to solve a problem and going to YouTube makes sense.”

YouTube shares advertising revenue with content partners, who may be big entertainment companies like Lions Gate or amateur videographers who have developed a following. Hundreds of these partners make more than $100,000 a year. Some, like Sal Khan, a former hedge fund manager who now makes math and science education videos, have quit their day jobs.

YouTube’s next challenge is to attract more advertisers by offering more professional, long-form content to supplement the videos of cooing babies and surprised kittens. YouTube is testing a pay-per-view film rental service and broadcasting live events like concerts, and it just signed a deal to show on-demand Major League Baseball games in Japan.

Hulu, the site started by TV networks that streams movies and shows, makes considerably more revenue per stream than YouTube because it has more professionally produced content, said Jordan Rohan, an Internet and digital media research analyst at Stifel Nicolaus. “YouTube is certainly the market leader in terms of streams. They’re certainly the market leader in terms of revenues,” Mr. Rohan said. But only a small percentage of its revenue streams would justify a high ad rate, he said.

YouTube must also follow its viewers as they increasingly watch videos away from their computers, on small mobile phone screens and big TV screens. YouTube now has 160 million mobile views a day, almost triple last year’s number. When Google introduces Google TV later this year, people will be able to watch YouTube videos on Internet-connected televisions.

Pakistan Blocks YouTube over Un-Islamic Content

Yahoo News

ISLAMABAD – The Pakistani government blocked access to YouTube on Thursday because of "sacrilegious" content on the video-sharing website, signaling a growing Internet crackdown against sites deemed offensive to the country's majority Muslim population.

The move against YouTube came a day after the government blocked access to Facebook amid anger over a page on the social networking site that encourages users to post images of Islam's Prophet Muhammad. The page sparked criticism because Islam prohibits any images of the prophet.

The Pakistan Telecommunications Authority did not point to specific material on YouTube that prompted it to block the site, only citing "growing sacrilegious contents." The government took action against both Facebook and YouTube after it failed to persuade the websites to remove the "derogatory material," the regulatory body said in a statement.

It welcomed representatives from the two websites to contact the Pakistani government to resolve the dispute in a way that "ensures religious harmony and respect."

The regulatory body said it has blocked more than 450 Internet links containing offensive material, but it is unclear how many of the links were blocked in the last two days. Access to the online encyclopedia site Wikipedia and the photo sharing site Flickr also was restricted Thursday.

The government blocked Facebook on Wednesday after a group of Islamic lawyers won a court order requiring officials to restrict access to the site until May 31. It was unclear if the ban against YouTube would also be temporary.

The Web page at the center of the Facebook dispute — "Everybody Draw Mohammed Day!" — encourages users to post images of the prophet on May 20 to protest threats made by a radical Muslim group against the creators of "South Park" for depicting Muhammad in a bear suit during an episode earlier this year.

The page sparked protests from radical students in Pakistan, with some holding signs urging Islamic holy war against those who blaspheme the prophet.

A series of cartoons of the prophet published in a Danish newspaper in 2005 sparked violent protests by Muslims around the world, including in Pakistan, and death threats against the cartoonists.

Facebook said Wednesday it was investigating the controversial page.

"While the content does not violate our terms, we do understand it may not be legal in some countries," the company said in a statement. "In cases like this, the approach is sometimes to restrict certain content from being shown in specific countries."

Online reaction to the Facebook ban was supportive in the initial hours after it was implemented. But comments on Twitter — which was still unblocked Thursday and drawing new users thanks to bans on other sites — showed many Internet users were angry about the new, wide-ranging restrictions.

"Sad and embarrassing day in the history of Pakistan. Tough times to be a Pakistani. Questionable decisions in a so called 'democracy,'" one user tweeted.

Pakistan blocked access to YouTube once before for two days in 2008 because of what it said was unIslamic content. Turkey, Thailand, Indonesia and Morocco have all blocked access to YouTube in the past for various reasons.

It remains to be seen how successful the government will be at keeping Pakistan's nearly 20 million Internet users from accessing the blocked sites. Other countries, such as China, permanently ban Facebook and YouTube. But citizens often have little trouble working their way around the ban using proxy servers and other means.

"What's common to Facebook and Lashkar-e-Taiba?" one user on Twitter wrote, referring to a Pakistani militant group. "They are both banned in Pakistan, but Pakistanis can still find them if they want to."

Google's YouTube Boosts Display Advertising 10-Fold

Bloomberg

 

 

Google Inc. has boosted the number of advertisers using display ads on its YouTube video site 10-fold in the past year, a sign the company is making headway to lift sales in businesses other than organic search marketing.

YouTube, the most popular U.S. video-sharing site, has gotten more companies to place display advertisements, such as videos or graphical marketing messages, said Barry Salzman, managing director of media and platforms for the Americas at Google, owner of the largest Web search engine.

“What YouTube gives advertisers is massive reach and massive audience,” he said in an interview.

As growth slows at its main business of selling ads next to search results, Google needs more revenue in other areas. Display ad sales may surpass $1 billion this year as the economy rebounds and customers spend more on marketing to raise brand awareness, said Sameet Sinha, an analyst at JMP Securities LLC.

“We are seeing brand advertisers come back,” said Sinha, who is based in San Francisco. He recommends buying Google and doesn’t own shares. “When the times are tough they focus more on advertising, which generates direct sales, but when things are improving they also want to get their brand name out there.”

Google, based in Mountain View, California, rose $4.91 to $530.60 at 4 p.m. New York time on the Nasdaq Stock Market. The shares have slipped 14 percent this year.

Google Chief Executive Officer Eric Schmidt said in January that “the next big business for us is display.” The company expanded its portfolio of display-ad businesses with the purchase of ad software provider DoubleClick in 2008. Last year it bought Teracent, which helps advertisers target users.

Build-Your-Own Ads

To attract customers, Google has expanded an exchange that matches buyers and sellers of display ads and added tools that help small companies build their own ads on YouTube. Salzman’s teams focus on packaging display advertising on YouTube as well as Google’s content network of more than 1 millions sites.

“We have aligned YouTube with our display product offering,” Salzman said.

The push into display is well timed as companies loosen marketing purse strings. During the recession, advertisers homed in on search advertising, viewed as more likely to result in sales. As growth revives, companies are increasingly willing to use banner ads to call attention to brands and new products.

Spending on the major categories of display, which includes banner ads and video, may rise 9 percent to $7.92 billion this year, according to eMarketer Inc. in New York. Search advertising may rise 5.9 percent to $11.42 billion.

YouTube Versus Hulu

YouTube, acquired for $1.65 billion in 2006, is central to Google’s effort to diversify away from search. Google, which depends on YouTube for most of its video viewership, had 42 percent of clips watched online in the U.S. in March, according to ComScore Inc. in Reston, Virginia. YouTube had 13.1 billion videos viewed that month, while its closest rival, Hulu, had $1.07 billion views, or 3.4 percent. Hulu’s owners include Walt Disney Co., NBC Universal and News Corp.

Carmaker Infiniti, owned by Nissan Motor Co., traditionally relied on Google for search-related ads. In March, it promoted its new “M” vehicles with ad space on YouTube and the Google Content Network, said Kathy Roznowski, senior manager of media operations for Infiniti in North America.

“YouTube has grown and changed, and they’ve offered better opportunities for advertisers,” Roznowski said. “On YouTube, we could be on the homepage, we could be on the masthead and have a very big presence.”

Viral No More

In the past, marketers typically turned to YouTube to place entertaining videos -- sometimes with only a subtle marketing message -- in hopes they would be passed widely among users.

“Not every piece of content is going to be viral,” said John Nitti, a managing director as Zenith Media, a Publicis Group SA-owned media planning and buying agency. “YouTube has done a good job of putting together packages and programs that help drive engagement and views of that content.”

YouTube and the Google Content Network, which offers display spots on news, sports and entertainment sites, can play complementary roles, said Salzman, who joined Google in January. A customer could use YouTube’s homepage to feature a more engaging ad, while the Google Network campaign focuses on “direct response” pieces that encourage an immediate purchase.

“YouTube is giving creative directors a much more innovative way to engage consumer brands,” he said, noting the home page has recently been mostly sold out.

While professional content has increased, YouTube still generates much of its content from users, Sinha said. Some marketers are hesitant to put their branded ads next to content that some viewers might find distasteful or offensive.

Even Hulu, which features only professionally produced content, doesn’t always sell out, said David Hallerman, an analyst at eMarketer. Trying to persuade all companies to treat online video as they might television will take some time.

“For the sort of brand advertiser that’s willing to spend a lot of money, it needs to be trusted content,” he said. “It’s not even the first inning yet.”

YouTube Video Playback Pages get a new Look

SAN FRANCISCO (AP) - One of the most popular sites on the Web - YouTube - is getting a new look.

The video-sharing site owned by Google Inc. is trying to de-clutter its video playback page in an effort to drive people to watch more of its massive archive, which includes everything from the latest Lady Gaga music video to a report on narcoleptic dogs.

Changes slated to be unveiled Wednesday include reducing the number of links that pepper playback pages, and moving the name of the video's submitter to just below the video's title. There will also be a collapsible link to the submitter's other YouTube videos and a button that lets viewers subscribe to these clips, making it easier to see what else that submitter has shared without bombarding viewers with links.

The site is also replacing its five-star video-rating system with a simpler option to "like" or "dislike" a video.

YouTube senior product manager Shiva Rajaraman said YouTube released more site features in 2009 than in the previous two years combined, resulting in playback pages that looked very busy.

Beyond making the site more user-friendly, the changes are meant to get users to engage more with videos on the site - such as by commenting on videos and sharing clips on Twitter and Facebook.

The layout of users' comments on videos will look different. Instead of listing comments in a long, chronological stream, they will be grouped so the first ones you see are those from the video's submitter.

A limited test indicates the changes are helping the YouTube search engine rankings: Rajaraman said that YouTube already rolled out the new design to 10 percent of its users and saw a 6 percent increase in the average amount of time people spend watching videos on the site each day, which usually hovers at 15 minutes. Rajaraman said activities related to videos, such as commenting on them, also rose.

YouTube is not the only big site trying to freshen up. The social-messaging site Twitter is testing a redesign of its home page. The redesign shows an ever-changing list of the most popular posts and scrolls through the top topics that Twitter users are writing about.

Viacom-YouTube Secrets to be Exposed in Lawsuit

SAN FRANCISCO (AP) - A legal tussle pitting media conglomerate Viacom Inc. against online video leader YouTube is about to get dirtier as a federal judge prepares to release documents that will expose their secrets and other confidential information.

The information expected to be unsealed Thursday will include some of the evidence that Viacom and Google-owned YouTube have collected to prove their respective points, but have kept under wraps so far during their 3-year-old dispute over copyright law.

The sensitive material is emerging now because Viacom and YouTube are citing some of the documents as they try to persuade U.S. District Judge Louis Stanton in New York to decide the case without a trial. Stanton isn't likely to decide on a so-called summary judgment for several more months.

Each side will likely be pointing to things that the other might find embarrassing.

The evidence is expected to provide insights into the early strategies of YouTube co-founders Chad Hurley and Steve Chen and how they responded to copyright complaints that quickly accumulated a few months after the Web site's 2005 debut. The documents also could reveal whether other media suitors tried to buy YouTube before Google acquired the site for $1.76 billion in 2006.

Viacom, the owner of Paramount Pictures and cable TV channels that include Comedy Central, sued YouTube in 2007 seeking more than $1 billion in damages.

Viacom alleges that YouTube built its early success by rampantly infringing on copyrights. YouTube maintains it follows the copyright laws governing the Internet.

Viacom seems particularly interested in sharing some of the documents that it gathered from YouTube and Google. The company, based in New York, argued for a quick release of the records shortly after it and YouTube filed their motions for summary judgments.

YouTube's lawyers unsuccessfully tried to persuade Stanton to keep the documents under seal until this summer.

One of the biggest disputes in the case is how YouTube monitored its site for copyright violations before Google bought it.

Viacom contends YouTube's employees realized copyright-protected video was being illegally posted on the Web site, but routinely looked the other way because they knew the professionally produced material would help attract a bigger audience and encourage return visits through SEO.

YouTube lawyers have contended there was no way to know whether copyright-protected video was coming from pirates or from movie and TV studios looking to use the Web site as a promotional tool. If a studio issued a notice of a copyright violation, YouTube says it promptly removed the specified clip as required under the Digital Millennium Copyright Act.

The 1998 federal law generally protects service providers such as YouTube from copyright claims as long as they promptly remove infringing material when notified about a violation. The outcome could hinge on whether Viacom can prove YouTube knew about the copyright abuses without formal notice from Viacom.

Although other content producers also initially complained about copyright abuse at YouTube, many media companies have since struck revenue-sharing deals with the Web site.

YouTube won over much of the professional media by developing technology that automatically detects video and audio claimed by its copyright owners.

Automated Video Captioning Changes The SEO Game

from MediaPost

Google launched an automatic video captioning service for YouTube videos in an effort to make the visual clips more accessible to deaf people or anyone searching for videos online, but some see advantages for search engine optimization, too.

The machine-generated service will generate English-only captions initially on 13 partner channels. The service combines Google's automatic speech recognition (ASR) technology with the YouTube caption system to offer automatic captions.

"Auto-caps" use the same voice recognition algorithms in Google Voice to automatically generate captions for video, according to Ken Harrenstien, the Google software engineer who created the technology.

The captioning service isn't perfect, but will improve in time, Harrenstien explains in a blog post. Harrenstien, who is deaf, created the technology because "the majority of user-generated video content online is still inaccessible to people like me," he wrote.

The idea of video captioning is not new at YouTube, but the automatic feature could help to further optimize videos for people searching for content across engines and on YouTube. In theory, video scripts should become more optimized by the keywords in the captions. And while it's a great feature to make content more accessible for the deaf, other benefits exist for marketers.

"Having a transcript in the video is huge for SEO," says Andrew Shotland, owner of Local SEO Guide, a SEO in Pleasanton, Calif. "Having targeted text on a page helps the video rank in search engines for specific searches."



Today, very little text from video is being captured on the Web because no one wants to transcribe thousands of videos. Walking through an example, Shotland says if YouTube begins by making one million videos available with automatic video capturing, that adds nearly a million new pages that engines can crawl, index and rank because on those pages are many keywords.

"If we're talking about a plumber video, that page will have words like leaky pipe, city name, change your toilet and many others the publisher may not have added to the written description on YouTube," Shotland says. "The videos will attract search engines even more. I wouldn't be surprised if YouTube's traffic goes through the roof. The video pages will have so much more text they can rank on."

Shotland says if the video transcripts work similar to the embeds, the tag that lets people add the video to their Web site, anyone pulling the YouTube video onto their site can also rank for the text.

The problem, he says, is that spammers will begin grabbing the captioning transcripts and people will begin to see the text appear across the Web. "It will become a spammer's wonderland," Shotland says.

The challenge to index videos has always been the self-tagging architecture, according to Kevin Ryan, chief marketing officer at WebVisible. "In theory, the videos should index more efficiently if they have captions," he says. "It's a big challenge because it's a self-attribution model. The first thing a brand manager wants to do is control where the video is seen, so it's never positioned in a negative light."

Google also announced a feature called Automatic Timing to help video owners add manually created captions to YouTube videos by automatically determining when the words are spoken in the video. Text transcripts are required -- no time codes required -- and Google does the rest.

Video captions made it to I/O videos on Friday. Every English and Spanish video from I/O now has captions that work in YouTube, writes Naomi Bilodeau, manager on the Google development team.

YouTube Pumps More Ads Into Lineup



Google Inc., which has struggled for nearly three years to turn YouTube into an advertising platform, is aggressively pushing new ad formats and ramping up deals with media companies for the online video site.

YouTube said Wednesday it will distribute a range of short clips from Time Warner Inc. properties such as CNN and the Cartoon Network. The agreement follows similar deals struck with Walt Disney Co.'s ABC and ESPN and a number of Hollywood studios earlier this year.

Such content is one piece of YouTube's new money-making emphasis -- a sweeping effort the company has tapped Google veteran Salar Kamangar to oversee. More professional shows help it attract higher ad rates. But to get the content, YouTube has had to push a range of new ad products to generate enough revenue to share with partners.

YouTube has recently added larger ad formats, shown a greater variety of ads against user-uploaded content and promoted videos that draw higher ad rates more than other videos.

While YouTube continues to lose money, Google Chief Financial Officer Patrick Pichette recently told analysts he was "really pleased" with YouTube's revenue growth and said it will be profitable "in the not long, too long distant future." Some Wall Street analysts estimate YouTube's revenue will roughly double to about $500 million this year.

Many changes at YouTube have been spearheaded by Mr. Kamangar, who since September has jointly run the video site with its co-founder and CEO, Chad Hurley. YouTube's other co-founder, Steve Chen, left his role at the site to work on other Google projects around that time.

Mr. Kamangar, who joined Google in 1999 fresh out of Stanford University and helped build Google's AdWords search-ad system, has pressed YouTube to be more aggressive with online ads and advocated promoting more content from media companies on YouTube's homepage.

One of Mr. Kamangar's first priorities was moving more Google engineers to YouTube's offices in San Bruno, Calif., about 25 miles away from Google's headquarters in Mountain View. He completed the shift of YouTube's video-serving operations onto Google's infrastructure, reducing video-serving costs and allowing the site to roll out features faster.

In an interview, the soft-spoken 32-year-old said the push for new ad products is driven by YouTube's need to make more money for premium video creators, whose content is increasingly among the most popular on the site.

"We can't be successful unless our partners are successful and making money," said Mr. Kamangar, a Google vice president of product management, who has stayed out of the public spotlight.
Advertisers are noticing a difference. YouTube is "definitely being more creative," said Nick Bomersbach, vice president of e-commerce for J.C. Penney Co. The retailer is making YouTube "a much more important component of our marketing campaigns," he added, after a campaign it launched in July to promote its new clothing line from professional skateboarder Ryan Sheckler was more successful in directing traffic to the retailer's Web site than its previous YouTube campaigns.

YouTube has mostly been a distraction since Google bought it for $1.7 billion in 2006. The Internet giant hasn't been able to turn a profit from the video site even though YouTube has grown into a massive destination, with 428 million unique monthly visitors in June, according to comScore.

As a result, YouTube has fueled doubts about whether Google can profit off anything other than search advertising, which generated the majority of its $21.8 billion in 2008 annual revenue.

YouTube has also embroiled Google in a legal battle with Viacom Inc., which sued in 2007, contending the video-sharing site violated its copyrights. Lawyers for both sides are currently building their cases and a trial date has yet to be set.

Last year, Google Chief Executive Eric Schmidt admitted that making money from YouTube was "taking longer than I thought."

Mr. Schmidt made turning around YouTube a company-wide goal and Mr. Kamangar was chosen to jointly run YouTube with Mr. Hurley.

Mr. Kamangar, who was among the first dozen people hired at Google, had most recently overseen Google Web applications, including Gmail and Picasa, Google's photo-sharing service.

Mr. Hurley, 32, credited Mr. Kamangar with improving YouTube's "focus and understanding" on "the advertising side," as well as smoothing communications with headquarters.

"We're going through the process of still learning the ins and outs [with Google], even though it has been two years, and he's helping us navigating the waters," said Mr. Hurley.

Mr. Kamangar has pushed YouTube staffers to take more risks. Last November, he overrode some executives' concerns about whether a feature that allowed people to watch video in high-definition was ready to launch. The feature went live three hours later.

This spring, after being told YouTube hadn't sold an ad on the home page for a few days, Mr. Kamangar advocated taking video ads that appeared on other areas of the site to fill that prominent space. Revenue from the home page increased, the company said.

Google's Online Video Quandary

Last summer there was a bit of a kerfuffle when one analyst's misdirected math led to wildly swinging estimates for a new advertising model for YouTube, the online video-sharing site owned by Google.

Morgan Stanley analyst Mary Meeker's original forecast suggested the model--small overlay ads that run on the bottom of online videos--would contribute $720 million in net revenue. Silicon Alley Insider analyst Henry Blodget kindly pointed out that Meeker had made a small error, meaning the actual estimate was a mere $720,000. Meeker dug back into the calculations and provided ranges from $76 million to $189 million. Blodget's own analysis suggested year-five revenues ranging from $200 million to $13 billion.

One year later, the only thing that's clear is that YouTube's financial performance is not meeting the expectations that led Google to pay $1.7 billion for YouTube in 2006. The problem isn't traffic, with YouTube now reaching close to 60 million consumers a month. Rather, YouTube hasn't found a way to have revenue grow at the same pace as traffic.

Why have YouTube's revenues grown more slowly than projected? One key challenge is that Google's core business model--matching search terms to ads--hasn't naturally fit with YouTube's model.

When Google purchased YouTube, some analysts expected it could port that model to video, turning YouTube's traffic into a gold mine. Unfortunately, it's not that simple. The keywords that describe a video don't always provide sufficient information to guarantee a successful match with an advertiser's target customer or message.

For example, imagine that a pet food company wanted an ad tied to the search term "dog food." While that search highlights vintage dog-food commercials, it also brings up a video spoofing disgraced NFL player Michael Vick, who is in jail for charges related to dog fighting, and a video titled "Alert! Rat poison in pet food boycott China K9 Killers!" Pet food companies are not likely to be excited to be paired to these kinds of videos.

All in all, Google sells ads against only about the 3% of YouTube's videos that are provided by or cleared by media companies. The other 97% is off limits.

Also, Google faces a classic quandary. The most "proven" money-making model for video advertising is to run short ads before or after a video plays (in industry lingo a "pre-roll" or "post-roll"). Extensive pre-rolls might cause angst among YouTube users who appreciate the ability to flip from video to video.

So YouTube is left with a huge audience but an uncertain business model. In some ways, this challenge should feel familiar to Google--it debuted in the late 1990s as one of close to 20 different search engines. While superior technology helped Google succeed, what really allowed it to break free from the pack was its disruptive business model that allowed companies to bid to place text-based ads tied to specific search terms.

While Overture (acquired by Yahoo! in 2003) pioneered the model of auctioning off search terms, Google put together an end-to-end model that made it simple and effective for Google search engine optimization and for companies of any size to advertise online, creating a juggernaut.

Google doesn't appear to be innovating to the same degree in the online video space. Rather, it appears to be trying to force-fit models that work on traditional television or on the Internet onto video advertising. This approach--cramming old models into new spaces--rarely produces breakthrough results.

Google needs an innovative business model to realize the potential of online video. Meanwhile, contenders are emerging online. One, start-up company VideoEgg, has introduced a series of online advertising models meant to deepen user engagement.

One such model places "widgets" at the bottom of an ad that allow users to see different versions of the ad or get more information. VideoEgg only charges advertisers if a consumer actually engages with an ad in some way.

VideoEgg's model might not be the answer, but overlays and pre-rolls are not likely the answer either. If Google tries to force-fit old models onto online video, it will create space for a competitor to do to it what it did to Yahoo! and Overture.

By: Scott D. Anthony
Forbes.com; August 25, 2008

Google Push to Sell Ads On YouTube Hits Snags
Video Site Is Key To Diversification; The Lawsuit Factor

Wringing ad revenue from YouTube is proving to be a challenge for Google Inc.

Although users of the popular video-sharing site view clips more than one billion times on most days, the site hasn't been as popular with big corporate advertisers. World-wide revenue from YouTube ads has fallen short of Google's expectations this year, and is likely to total about $200 million for the full year, according to two people familiar with the matter.

YouTube is critical to Google's campaign to extend its advertising reach far beyond text ads tied to Web searches, its revenue powerhouse. Google wants to sell more video ads and display ads on YouTube and elsewhere. It also wants to crack the television, radio and newspaper ad markets. Its target: the 90% of global ad dollars that don't currently flow to the Internet.
Tim Armstrong, an advertising executive at Google, says a sketch drawing -- stick figures and all -- is guiding the Internet giant toward a new ad model. WSJ's Kevin Delaney reports. (July 9)

"Most advertisers are still testing the waters on YouTube," says Sean Muzzy, media director at Neo@Ogilvy, a digital ad agency owned by WPP Group's Ogilvy & Mather. Some big advertisers, he says, haven't been comfortable that their ads might appear next to amateur videos. Google Chief Executive Officer Eric Schmidt has acknowledged that the company hasn't yet found the best formats for video advertising.

Copyright litigation has complicated the YouTube ad push. Viacom Inc. sued Google last year in connection with clips of television shows and films posted without authorization by YouTube users. Although Google says it hasn't broken copyright laws, it significantly cut back on the number of clips it would sell ads against, so as not to sell them against infringing material, according to one person familiar with the matter.

Tim Armstrong, Google's head of advertising and commerce in North America, is helping to lead the diversification push. When he dug into complaints from salespeople about Google's system for selling YouTube ads, he uncovered another part of the problem: a sales system hamstrung by inefficiencies.

Some YouTube advertisers, for example, had to pore over three separate legal contracts. Before Google salespeople around the country could propose certain deals to YouTube advertisers, they first had to get approval to do so from a temporary worker in California. And lacking a fully automated billing system for YouTube, Google staffers had to calculate some bills manually.

By May, Mr. Armstrong and his colleagues had identified some 105 problems with YouTube's ad sales, according to one person familiar with the matter. The ad difficulties extended beyond YouTube. In its successful search-ad business, Google recently counted 24 separate internal systems for helping advertisers come up with search terms to have their ads displayed alongside. "Barnacles started to build up on the outside of the process," says Mr. Armstrong.

Twenty months after Google bought YouTube for more than $1.7 billion, Mr. Armstrong and his colleagues have begun to untangle the problems with its advertising operations -- which generated 98% of Google's revenue in the first quarter. The initiative is code-named "Project Spaghetti."

The effort could affect how successful Google is at expanding beyond advertising tied to online searches. If Google is to maintain its torrid growth rate in the years ahead, it needs to tap other forms of ad revenue.

In the first quarter, Google's U.S. ad sales were up 31% from the year-earlier period to $2.5 billion. (Google doesn't break out revenue by category of ads.) That growth rate would thrill most companies, but for Google, it's a slowdown. In the first quarter of 2007, U.S. ad sales jumped 49%. Still, Google exceeded analysts' estimates for revenue and profit in the first quarter, partly because of strength outside the U.S. Google's shares have dropped about 25% from their November closing high of $741.79.

It isn't the first time Google has wrestled with advertising problems. Six years ago, it changed its sales model for so-called search ads: When Google users conduct a Web search, ads related to the search words pop up next to the results. Google began charging advertisers only when users clicked on the ads, not every time they appeared on a user's screen.

That new advertising model was hobbled initially by overlapping sales databases and disparate billing systems. In 2002, Google launched "Project Drano" to overhaul the operation. Problems instituting a new system -- many ad campaigns were inadvertently shut down -- "nearly killed" Google, said Mr. Schmidt, the chief executive, in a 2005 interview. It took Google about six months to get it right, and the search-ad business exploded. (Google has a deal with MySpace to sell ads on that social-networking site, which is owned by News Corp., owner of Dow Jones & Co., publisher of The Wall Street Journal.)

Mr. Armstrong, who is 37 years old, describes Project Spaghetti as an effort to fix the plumbing behind all of Google's ad initiatives. The inefficiencies, he says, are a product of Google's rapid growth and its innovation. Streamlining the systems and developing new ad formats, he says, should eventually improve the company's bottom line.

Mr. Armstrong, a seven-year Google veteran, says the company's traditional search-ad business is still gaining market share, and has plenty of room for growth. Nevertheless, he's been working for several years to develop ways to sell ads in other media, believing that Google could help advertisers better reach target consumers and measure the results.

In 2005, Google began trying to broker ads sales for magazines. To branch into radio advertising, in 2006 Google bought dMarc Broadcasting Inc. of Newport Beach, Calif., which ran an online system for advertisers to buy radio time. Google tested placing TV ads on a small cable system near its headquarters, then signed an ad deal with satellite-TV provider Dish Network Corp.

Big Ambitions

Google's 2006 acquisition of YouTube signaled that it had big ambitions for online video advertising. YouTube's revenue was only about $15 million that year, Bear Stearns analysts estimated. But Google believed YouTube would be attractive to traditional TV advertisers and others.

Mr. Armstrong and his team had to persuade skeptical advertisers to start spending chunks of their ad budgets on Google's new offerings. At a September 2007 meeting of Google ad executives in New York, Eileen Naughton, who heads Google's display and video ad sales, illustrated the magnitude of the challenge with photos of Mount Everest and Sherpas.

Last fall, Mr. Armstrong says, he began to realize that internal problems were interfering with progress. Newly acquired companies such as YouTube and dMarc Broadcasting had their own sales systems, and Google was building others piecemeal. The end result was overlap and inefficiency.

In March, after salespeople complained that selling YouTube ads was taking longer than it should, he kicked off Project Spaghetti. In order to get a closer look at the problems, he moved that month to a cubicle in the middle of a YouTube ad team, two floors above his New York office. He says he was determined to find out exactly how YouTube ad sales worked.

In May, Google held "weeds days" for YouTube -- it wanted to get everyone into the "weeds," or details, of the ad-sales process. The result was the list of about 105 fixes, says one person familiar with the matter. Mr. Armstrong characterizes some of them as very minor.

One of the top five suggested short-term fixes was to allow ad salespeople to discount YouTube ads by 10% without securing management approval, the person familiar with the matter says. Another was to eliminate a requirement that a certain temporary worker -- she's referred to only as Miriam in an internal presentation -- had to sign off on YouTube ad proposals, which created a bottleneck. Mr. Armstrong says that step now has been largely automated, and the worker only gets involved later in the process. He declines to comment on discounting policies.

Project Spaghetti, Mr. Armstrong says, should be completed by the end of the third quarter. But even if the internal problems are ironed out, Google still has to persuade advertisers to spend more on its new ad offerings.

One complaint from mainstream advertisers is that YouTube -- where clips uploaded by users range from raunchy to heartwarming -- lacks enough content alongside which they want to run their ads. New Line Cinema, for example, created an ad campaign on YouTube last summer to promote its movie "Hairspray." The ads performed well, New Line said, but it had a hard time finding enough YouTube videos where it wanted to put the ads.

General Motors Corp. has been a regular buyer of Google search ads. More than a year ago, it experimented with advertising its Cadillac brand on YouTube. Since then, it hasn't significantly boosted its YouTube ad buying, says Mike Devereux, GM's executive director of digital marketing and customer relationship management. He says GM is watching Google's ad-diversification plan closely. "As they get their platform ready for other media, we will get there with them," he says.

Mr. Schmidt, Google's CEO, said earlier this year that "it's taken longer than I thought for us to find the right combinations" of YouTube advertising formats. He added that he believed it "will ultimately be very, very successful for us and the industry."

The Viacom suit has complicated matters. Fearful of fueling allegations that it is profiting from copyright infringement, Google will only sell ads against YouTube clips that have been posted or approved by media companies and other partners -- roughly 4% of the total, says one person familiar with the matter. A Google spokeswoman declined to comment on how the litigation has affected where ads are placed. Last week, the federal judge overseeing the Viacom case ordered Google to turn over some data about YouTube users and viewing records, stirring privacy concerns.

Google plans to begin accepting "preroll" and "postroll" ads, which will run before and after some YouTube video clips, according to one person familiar with the matter. The plan under consideration, this person says, would give companies that post video clips the option to sell such ads, and share the revenue with Google. YouTube has long forsworn such ads because consumers don't like them. But advertisers consider them highly effective.

Google began offering Internet display ads several years ago, but they haven't gained as much traction as many at Google had expected. The display ads bring in a few hundred million dollars annually, according to one person familiar with the matter.

Acquiring DoubleClick

Google is hoping that its recent $3.2 billion acquisition of Internet ad services company DoubleClick Inc. will boost display-ad sales. Internet publishers pay DoubleClick to insert ads onto their Web sites as users visit the sites. DoubleClick also offers a system to ad agencies for managing and tracking online ads. Google wants to leverage DoubleClick's relationships with Web publishers and ad agencies to sell more display ads.

In radio and TV, where Google collects commissions for brokering ad sales, the company still doesn't reach enough top markets and consumers, some advertisers say. Sales of TV ads generated around $25 million in revenue for Google last year, while sales of radio and newspaper ads brought in even less, says one person familiar with the results.

Others in the ad industry are skeptical about whether Google's forays into these advertising categories will ever be as profitable as the company's stronghold, search ads, where it holds a major lead over rivals.

"They will do some good business, but not at the [profit] margins" the company has with search ads, said Maurice Lévy, chairman and chief executive of advertising giant Publicis Groupe SA, late last year.

Mr. Armstrong says it will take Google another five or 10 years to realize its advertising vision. He says advertisers are getting on board, but he acknowledges that the company's main rivals have adopted similar approaches. "The next five years of the Internet is about execution," he says.

By: Kevin Delaney
Wall Street Journal; July 9, 2008

Does the Web Deserve The Power It Gained To Influence Politics?


Considering how Barack Obama is one of YouTube's biggest stars -- the video of his Philadelphia speech on race is just the latest involving the senator that, by Web metrics, went platinum -- you'd think he would be one of the site's most unalloyed fans. The other day, though, he was vigorously ambivalent.

Those enlessly played clips showing Rev. Jeremiah Wright making controversial racial statements, Sen. Obama told an interviewer, aren't representative of the man. "I don't want to suggest that somehow, the loops you have been seeing typifies the services all the time," Sen. Obama said. "That is the danger of the YouTube era. It doesn't excuse what he said. But it gives it some perspective."

As with Nixon going to China, it might take an Obama, with solid youth-tech cred, to suggest any downside to the online world. Considering the rapidly growing number of Americans who rely on the Web to follow the election and judge its players -- even if mostly via mainstream-media sites -- it's a good time to look at all the Web does very well with politics, and at what it messes up.

Web videos, especially on YouTube, are a good place to start. They have been called the death of the TV sound bite, for the way voters can experience lengthy realities without the filters of a news show constrained by time limits and commercials. The 37 minutes of Sen. Obama's race speech quickly became one of the most widely downloaded.

Less clear is whether YouTube will be just as bad, or worse, at blurring the line between a fair point and a cheap shot than newspapers or TV ever were.

Elected officials, especially those in small communities, have complained since the invention of the camera that one sure way to get their picture into the paper is to fall asleep at some legislative event, even one that has lasted all night. But if a dozing politician thinks being in the day's newspaper or the night's newscast was a problem, wait until the clip gets viewed eternally online.

Montana Republican Sen. Conrad Burns had plenty of other problems when he ran for re-election in 2006, but the campaign wasn't helped when he was caught shutting his eyes for a few seconds at a Senate hearing on a farm bill.

Videos like these may enjoy the popularity they do because they confirm ideas already held about the politicians involved, in which case blaming YouTube confuses cause and effect. But there is a danger that our politics might be shaped by insignificant events that assume an importance merely by having been caught on tape.

It's not just video that is being refashioned in the Internet age, but words, too, through blogs and other widely democratized forms of expression. Blogs are enormously useful, if only because of the way they allow communities with similar politics to follow the ups and down of a campaign as a group.

When Hillary Clinton or John McCain give major policy speeches, commentators feel compelled to have their thoughts online within a few hours -- even those who work for weekly newsmagazines. And, in keeping with the conventions of blog posts, which rarely go on for more than a screenload of type, they were often expressed in just a few hundred words.

Blogs then, make possible an amazing diversity of lucid ideas, but those ideas tend to be quickly considered and briefly expressed before everyone moves on to the next topic du jour.

Discussion such as this one about the Web and politics usually involve the newest and most glamorous parts of the Internet: the participatory, Web 2.0 neighborhoods, like blogs and YouTube.

One of the biggest electoral impacts of the Web involves one of its earliest applications: email. It's an easy and effective way for people to share ideas with friends about what might be going on with the candidates. By operating person-to-person and under the radar, email can have an enormous and injurious influence before anyone even notices.

The Obama camp learned this earlier this year when emails making false statements about the candidate's religion started showing up in millions of in-boxes. Old-fashioned whispering campaigns usually work only in relatively small, cohesive communities. With email, though, they can be national and nearly instantaneous.

Suggesting that there is both good and bad with the Web and politics isn't to say they exist in equal amounts. Say what one will about the shortcomings of blogs, I can't imagine going back in time to a world where a relatively small number of newspapers and magazines -- even though by and large they were very good ones -- had an effective monopoly on what did and didn't get printed about a campaign.

The Web isn't going away, and so its boosters should no longer feel defensive when its inanities are pointed out. The YouTube political debates where voters submitted video questions, from January, for example, were described as a singular chance for citizens to question candidates directly, which sounded good until one of the questioners presented himself as a snowman.

Because it's such a vastly powerful network, the Internet has the ability either to elevate or to debase the political discussion. Both will be occurring between now and November, though with a little luck, not in equal amounts.

By Lee Gomes
Wall Street Journal; March 26, 2008