Life is getting complicated for YouTube
So YouTube will start paying some people for their videos -- or at least "we're definitely moving in that direction," says co-founder Chad Hurley at Davos (hat tip to Jeff Jarvis). He doesn't say how that would work, but he does explain a new "audio fingerprinting" system that would help record companies identify their music being used in user-generated videos. The idea, I think, is that both the record company and the video producer would share in the ad revenues generated by traffic to the video.
Earlier this week, The Browser discussed the fact that in its pre-Google (GOOG) days, YouTube seemed dead-set against this concept. And in his comments at Davos, Hurley certainly sounds like he's not necessarily 100% behind the idea himself:
We didn't want to build a system that was motivated by monetary reward. We wanted to really build a true community around video. When you start out with giving money to people from day one, the people you do attract will just switch to the next provider who's paying more. We're at a scale now that we feel we can do that and still have a true community around video.Certainly YouTube isn't the first site to try this. In fact, there's a whole category of enterprises called "consumer-created content companies" (or C4's) that work on this model. Examples in the video domain are Revver and Eefoof, but there's also JPG Magazine for photos and Threadless for T-shirt designs. So Hurley is right to worry that paying users will cause people to jump ship to the highest-payers. But is he also right his site's "community" will keep users glued to the YouTube?
Some brands, like Harley-Davidson (HOG) or Apple (AAPL), probably could get away with just asking customers to create content for them (that they'll then use to make money) since very, very passionate fans don't have to be rewarded. But is YouTube one of those brands, or communities? Because if a competitor does pay better, and gets some A+ content out of it, why wouldn't people go where the good stuff is? There's no transaction cost to switching your web-browsing habits. And is anyone in love with YouTube for any reason other than that its got the most, and the best, stuff?
So I think Chad is right to be skeptical of the idea. It's a shame that YouTube's advantage in this fight -- scale -- is also what probably drew record companies to pressure YouTube to develop this kind of revenue-sharing model in the first place. Ultimately YouTube will need to create other reasons for people to not bounce to various clipsharing sites, and that might require an even more dramatic change to their business. I'm not sure this is why Chad and Steve got into the business. Google's billions have certainly come with a serious price tag.
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