Chad Hurley and Steve Chen

There’s a fight on the horizon, and it’s going to be bloody. YouTube is one of the internet’s biggest success stories, and it has a massive impact on today’s media landscape. Meanwhile, some old media businesses will do anything to defend their old business models: entertainment giant Viacom is suing YouTube for a whopping $1billion over copyright infringement, while the Premier League has teamed up with several sports’ rights owners and music publishers todo the same. YouTube’s founders, Steve Chen andChad Hurley, are remaining calm.

“From day one, we’ve always operated under the law,” explains Hurley, the company’s CEO. “There are many more people on our system participating and creating their own content than there are infringing. The way we view it, we have hundreds of competitors, and if you could build a successful site based on infringing content, you should have hundreds of successful sites. That’s just not the case. We continue to build tools to deal with these problems, and we’re confident that we’re going to have great solutions.”

With Google being the technology powerhouse that it is, working so closely with the Google engineers has definitely been a sigh of relief

Chen, YouTube’s chief technology officer, tells us how a lot of effort has been put into educating users. “People don’t realise that they don’t have the rights to use a track from an album they bought for a piece of video they’re creating for public distribution. But I think the biggest thing, especially with the acquisition from Google, is being able to leverage the mass amount of research and technology they have. With Google being the technology powerhouse that it is, working so closely with the Google engineers has definitely been a sigh of relief.”

In fact, since before the acquisition, Google has been working on different video-fingerprinting and audio-fingerprinting concepts to automatically detect when infringing content surfaces on the site. Once that content has been taken down, it won’t make it upto the site again. Breaking down who owns what rights on any given clip is a gigantic undertaking. YouTube is testing the technology, dubbed Claim Your Content, with partners like Disney and Time Warner, and Chen says the trials are incredibly promising.

“The reason why we’re working with the Google video-fingerprinting team internally is there’s nobody out there creating these tools. The people in the Google video team are the leading experts, but at thesame time, this is still a nascent technology. Early indicators from people testing the video-fingerprinting tools with their own content are very encouraging.”

Commercial partnerships

As Google and YouTube are seriously addressing the copyright problem, more big companies are coming around to the idea that it’s better to work withYouTube than fight it. Many content providers, including the BBC, have recently signed deals with the video-sharing site. Over 1,000 partners are already onboard, EMI being the fourth and final major label tojoin. It’s the only option; YouTube is too popular to ignore the opportunities it’s opening up for more distribution, promotion and revenue. Chad Hurley points out that YouTube provides a huge online audience that simply wasn’t available before. Indeed, last summer, YouTube became the fastest-growing website. A survey by traffic monitor Hitwise showed that YouTube’s market share is 50 per cent greater than the next 64 competitors combined. More than 200 million videos are watched every day, and six hours of new content is uploaded every minute.

The road to GooTubeNot even its founders anticipated this level of success when they created YouTube in early 2005. The former PayPal employees were frustrated with online video and wanted to build something that would solve their problems. “More and more people had devices that could record video, but there was just no place to put them,” Hurley recalls. “Video sites at the time were basically just a reflection of the linear television model. They weremaking editorial decisions about what was entertaining to the people by programming their homepages and not allowing everyone to participate in the process. By opening that up, we democratised the entertainment experience.”

Chad Hurley and Steve Chen

YouTube grew at a phenomenal speed. “This whole experience is really unexpected,” says Hurley. “We’re thrilled that we created a service that’s been able to touch the world. We hear stories of people using our services in places such as Africa, where children go to computer centres to view videos on YouTube and then say it’s acting like a window to the world for them.Two years ago, we could never have imagined things like that.”

They probably couldn’t have imagined selling their site to Google for a respectable $1.65billion, either. It’s a lot of money to make before you hit your thirties. So what did they splash out on once the deal was struck? “We had a little party here behind our office at TGI Fridays,” laughs Hurley, “so we bought some bar food.” Chen treated himself to a European car, but there were also benefits for YouTube as a company – they opened up a cafeteria, and the employees really do enjoy the great Google food, as Hurley jokes.

Joining forces

According to Hurley, the relationship between the two companies is symbiotic. “The cultures are similar,” he explains. “Google is about making information universally available to everyone around the world, and video is a piece of information that we’re helping people gain access to. The goals are aligned.

We realised that itwould be great for both of us, because Google was trying to build a video product that was competing with us and they weren’t having as much success as us

“We already had a great relationship building up to the deal. I’d met up with many members of the team, and we’d talked about different companies wanting to acquire us during our growth, but it was never our intention to head in that direction. We were just concentrating on our product and building up a business. But at the end of the day, we realised that itwould be great for both of us, because Google was trying to build a video product that was competing with us and they weren’t having as much success as us. We were looking to build our own monetisation strategies, and in that space, Google had great success. So we decided to combine forces and build agreat product together.”

The deal is bearing fruit. To improve usability, YouTube has launched nine national sites for countries such as the UK, France and Brazil, and many more will follow. Chen explains how this is something they always wanted to tackle, but couldn’t due to a lack of resources. So, it was one of the first projects they concentrated on after the acquisition, relying on Google’s resources for translation and localisation. Now that more than half of YouTube’s traffic comes from outside the US, this makes perfect sense.

Google will also help develop the business model. “We’re running tests to see how people respond,” says Hurley. “Google knows how to monetise with ads, but we’re all about the user experience – we want to make sure that we have advertising concepts that improve the experience.” They’re also working on ways to improve the image quality of clips. “We’re exploring ways to dynamically figure out, based on the connection speeds of servers and users, what type of video streams we should be sending. Different people, whether they’re on a modem or on broadband, are going to receive a different video quality.”

Ultimately, Chad Hurley and Steve Chen want to bring YouTube to every screen, to mobile devices and to living rooms worldwide. YouTube is hugely powerful, and a couple of high-profile legal cases are unlikely to bring it to its knees. Thanks to Google, it now has vast resources and can react quickly to the rapidly changing market. As partnerships go, they don’t get much better.

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