Mark Cuban analysis of YouTube situation

Mark Cuban goes deeper today with thoughtful analysis on why he thinks YouTube is in a bad spot. Mark and I exchanged email four times over the weekend on this subject, and I am now, reluctantly, convinced he is right. The clincher for me was when he said;

"Napster talked about how much indie music they sold, as did Grokster, Streamcast, etc. It wont matter for Youtube either, i dont see them meeting the safe harbor rules. But we can argue all we want. If the Content companies dont like it, they will change the DMCA to fit what they need."

Mark is right about that. The MPPA and RIAA have the US Congress in their pocket. They have changed copyright laws and the DMCA (Digital Millennium Copyright Act) several times, and will do it again if the courts don't rule in their favor.

In our email exchanges Mark said he admired any company that pushes the envelope, but it is difficult enough to build a new business without taking on the added burden of endless lawsuits from Hollywood studios with very deep pockets. Mark has a very pragmatic approach to business. Take huge technical risks, be ahead of the market, but don't take on needless legal risk.

YouTube can still build a good business but they need to address several issues quickly;

1. Negotiate licenses and revenue sharing deals with the major content owners.
2. Strictly enforce "terms of use" which prohibit posting copyrighted material.
3. Promote UGC (User Generated Content) that has no copyright use restrictions.
4. Create an environment similar to "America's Funniest Home Videos" to attract and promote good content.
5. Sell sponsorship deals and targeted advertisements to get their revenues going.
6. Forget the multi-billion dollar buyout dreams, focus on building a real business.

We tried to do the same thing at Napster...and failed. It is not easy to do. Sadly, YouTube could join a long list of early innovators who were eclipsed by fast followers. There is still time for YouTube to solve these problems, but it is more likely a new competitor will start with a clean slate and get it right.

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Comments

[Mark Z.]

I don't see that YT can "strictly enforce 'terms of use'". This is where most of the interest of the users is, and I stick to this, even if people are saying that this is not the case.

I did a quick check on popular names, "BMW", "Julia Roberts", and "Mercedes" and sorted the result pages by view count. Guess what? Between 50% and 80% of the results on the first page are what I consider "infringing content", i.e. TV ads, TV segments, movie clips, etc etc. Do the test by yourself, using a query with a popular name or brand. Then sort by view count.

And this makes sense - people ARE interested in quality content. You can only endure so many shaky homemade videos that are remarkably unfunny. They come to YT to find exactly this. They may have a look at the other (UGC) videos, but they are coming for the copyright protected quality stuff.

Soo, if YT is enforcing their policies, they will kill their service. So I predict this will not happen anytime soon.

[Rob Hyndman]

They don't need to change the DMCA. The Grokster test has them squarely in its sights already. The inducement test means that content owners don't have to worry about the Sony substantial non-infringing use or the DMCA safe harbors if they can prove intent. And with the trial reconsideration, it looks like substantial infringing use is going to be enough, at least for now, to prove intent. 60 seconds on YT's top videos of the last 30 days page will be enough to prove that.

Mark is right, but not because the DMCA will be changed.

[Samiuela LV Taufa]

And if you're technically savvy, or if they make things any easier, you can just download the videos (after all grabbing streaming video has been around for a very long Internet time)

I download ALL of the YT videos I like so my kids can play it ad nauseam without eating away at our bandwidth count.

Services like KeepVid.com make it so easy with their toolbar add-on to suck down a video. It isn't going to take long before there's a lot more people using similar services, and then the oft-mentioned play-count goes out the door (i.e. figures on how frequently videos are played is no longer accurate nor close to being accurate?)

Now, all I need is Keepvid.com and similar services to let me provide a "Link" for my visitors so they can click on it and download instead of playing the video. Great service for my visitors, not especially nice for YT and similar providers.

Sam T.

[Chris D]

Ultimately, I think YouTube will gradually go the route somewhere between iFilm and Revver: acquiring/signing up talented "semi-professionals" who can develop relatively inexpensive content.

This means screening submissions, which is a bummer for them as it will be an expensive proposition for them and will slow down the "immediacy" that the site has right now.

Note also that they've been trying to get college kids to sign up, which means that it has an .edu email address. This .edu account is more traceable to an individual, so that might be a means for YT to discourage illegal uploads since the user account can more likely be traced to a real email account this is being administered by a reliable source. However, I tried this out and signed under my Alma Mater. Even in a "forward-thinking" and tech-friendly environment as MIT, there were only maybe a dozen other signups and just one video. Seems like that drive to YouTube colleges is a big flop, so far.

YouTube has already bootstrapped with copyrighted material and have developed a strong brand name, so it may be possible to exist as a brand/service without copyrighted material.

I think in the current User Generated Video market, it's probably best to be a "quick second" than be YouTube and trip over the landminds. I've said that Fall will be YT's "peak". Maybe it won't crash and burn - certainly Sequoia will pump lots of money into YT to keep it alive probably for another year or two.

[Tom Foremski]

Content will be king, and I have the dotcom :-)
In an era where the technology is a commodity, the value-add has to be in the content and not (very much) in the aggregation.