YouTube Turns 5: How It Grew From a Pest to a Powerhouse
YouTube was once seen by mainstream media companies as a destructive platform dominated by amateur videos and pirated content. But in recent years the company , which turned five this week, has transformed into a legitimate business partner with an increasingly dominant market share.
The company's growth in the smartphone era has been explosive. It announced yesterday that it has doubled its traffic since October, and now nets two billion views per day. According to CNBC, this has been accompanied by great growth in advertising as well:
Ten times more marketers are running branded campaigns on YouTube than a year ago. Ninety-four of the top 100 Ad Age advertisers have campaigns on YouTube.A peek at the top ten most viewed YouTube videos helps illustrate the development of the company from an adolescent annoyance to a powerful ally. The most viewed clip is now Lady Gaga's Bad Romance. In fact, and this is crucial, only two amateur videos make the top ten. The majority of the slots are now filled by mainstream stars like Miley Cyrus, Justin Bieber and Lady Gaga. And compared to earlier hits, these videos now routinely rack up 100 million views or more.
These videos exists on Vevo, the partnership formed between YouTube and three of the four major labels -- Universal (UMG), Sony (SNE) and EMI. Small feature ads often precede VEVO videos, along with banner ads during the clip and loads of display ads on the page. The video also features a click through to Amazon (AMZN) and iTunes (APPL) for folks interested in purchasing the MP3. Sure, anyone can still upload content to YouTube for free. But on Vevo, which is hosting many of the site's top videos, commerce is baked into the equation every step of the way.
As my colleague Mike Duff pointed out, a big question among the traditional home entertainment crowd is whether YouTube can leverage its billions of free page views into a hybrid service where customers also pay for some content. The old schoolers are hoping the answer is no. YouTube certainly has plans to experiment with paid services. But as bandwith costs drop, online advertising grows and viewership explodes, YouTube will soon be able to turn a profit without having to move beyond an ad sponsored model.
Film and TV studios would be smart to look at VEVO as an example of how a partnership with YouTube might work. Google (GOOG), which bought YouTube in 2006, is expected to announce details of its expansion into television this week. And as YouTube CEO Chad Hurley said recently, in the near future, "I don't think there's going to be much of a difference between a phone, a computer and a television." Traditional purveyors of the moving image should consider the benefits of cooperation now, before this integrated screen becomes a reality, and YouTube is the biggest theater on the block.
Image from Flickr User Hammer51012 Related: