YouTube Goes Long

YouTube began as a bit of a Wild West of online video, but soon settled down to become the number one site for short, user-generated clips in the world. Mainly under Google’s ownership and tutelage.

But it has recently been trying to add more professional, long-form content as well. Some old movies and TV shows are now available on the site, and in the U.K. it has recently inked a deal with Channel 4 to have its archive of programming added to the site.

However, while Channel 4 is happy to sell its wares to YouTube for advertising revenue (alongside 4oD), most content creators and television networks aren’t so ready and willing to license their content. At least not merely for a share of advertising revenue.

Cue alternative revenue models.

Revenue Options

In September we reported how movies could be coming to YouTube, offered on a $3.99 rental basis similar to the standard set by Apple iTunes.

Then just a few weeks ago we reported how TV shows could also be added to the mix, with YouTube charging $1.99-per-episode.

This wouldn’t be going against the grain as Hulu is almost guaranteed to be preparing to charge for some content, while Apple is thought to be considering a $30-a-month eat-all-you-can subscription plan.

Subscription Plans

And now, according to Reuters, Google’s vice president of content partnerships, David Eun, has paved the way for YouTube to start a similar plan.

He said:

“We’re making some interesting bets on long-form content; not all content is accessible to us with the advertising model.”

In which case YouTube would like to offer content partners the option which works best for them. So the ones who are happy to take a share of the advertising revenue generated on the site can do, with others being able to opt for alternatives.

As well as rentals and downloads, monthly subscription fees are being considered. Which would put YouTube in direct competition with Cable companies.

Conclusions

This kind of deal would make sense for content creators and television networks which can see the future is in online video but which doesn’t want to give up the right to make a ton of money on licensing content.

The danger for YouTube is trying to be everything to everyone. And the site could end up cannibalizing itself by not focusing on one particular aspect of online video. Which until now has been short-form UGC.

KickAssTorrents.com is a new player in the torrent search space creating an easy and currently ad-free way to search for music, TV shows, movies, eBooks, and software.

The torrent portal launched publicly back in February 2009 and in under 10 months has quickly become a serious player in the torrent space.

KickAssTorrents has told WebTVwire.com that it receives over 100,000 visitors each day. A quick look at the traffic growth on Alexa confirms this:

[source]

Sweet Usability

Upon arriving on KickAssTorrents.com you’ll instantly notice the clean design, ease of use, and obvious absence of advertising.

Torrent sites have become the underground playhouse for scammy advertisers promising russian wives, instant weight loss, hot girls in your area, and seedy work from home opportunities.

It is a breath of fresh air to see a torrent site that lacks advertising, but the site is still young and KickAssTorrentz could yet be seduced by the promise of ad-revenue checks.

However, right now KickAssTorrents is probably the most friendly torrent search engine out there, and with ThePirateBay having no end of trouble KickAssTorrents is filling in the gap.

The aggressive and tech-fearing rights holders still haven’t quite grasped that taking down one great torrent site will just give birth to another.

KickAssTorrentz is also pushing forward with some interesting innovations and community features such as ajax comments preview, a firefox search plugin and last.fm and imdb integration.

However, legal pressure is still the biggest threat to any torrent site, and the owners of KickAssTorrents, like many other torrent sites, look to be trying to divert attention away from themselves and remain a hidden hand behind the Torrent portal.

KickAssTorrents Interview

I had the pleasure of being able to interview KickAssTorrents and dig deeper into this promising Torrent portal.

What caused the very recent, sudden and powerful jump in traffic for KickAssTorrents at the end October 2009?

It happened because of a number of different factors. From the inside we started a new marketing campaign, re-launched our blog, made a lot of small changes, etc.

From the outside we got recognition from the torrent community, landed on few top lists, got some good reviews, became listed on torrentz.com and torrent-finder.com and here we are. And yeah we became the default search engine for Vuze.

What do you believe it is about KickAssTorrents that sets it apart from other Torrent sites?

Skill + Creativity + Work. All the popular trackers are old and really lack usability, most of the new trackers/torrent search engines lack creativity and just intend to copy the existing trends.

We instead tried to create something more interesting. Our developers used latest search technologies and our designers did their best to make the site both easy to use and good looking.

We also added various features like direct http download of selected torrents, last.fm and imdb integration, customizable user area and many small things like ajax comments preview. And of course we constantly improve KickAssTorrents to make it even better.

I saw some potential evidence that the owners of KickAssTorrents are based in the Ukraine. Is this true? If not where are the owners/company based?

We prefer to say that the owners are based online. During our work KickAssTorrents was intended to be a torrent search engine of tomorrow, and in future the country where you are based is irrelevant.

The biggest threat to any Torrent site is legal issues which can result in the site been taken down. What are you doing to protect yourself from this?

We have a disclaimer concerning copyright issues and we are open to communicate with any copyright holders. But we will remove content only if these companies or individuals provide enough legal basis for removal and most important a properly filled DMCA request.

I noticed there were no adverts on the site which is rare for a torrent site. Why have you done this and do you intend to continue this no-ad policy?

We removed ads to make the site more usable and less annoying. And yes we plan to continue this policy. We are simply not interested in fast ad-money, our goal is to establishing a good torrent site.

What role do you see P2P file sharing having in 10 years time and how do you envisage rights holders and P2P networks could work together?

In 10 years time P2P file sharing will be popular, huge and wireless. If not there will be some other new type of file sharing.

As for right holders the ones who are interested in profit and not in legal issues, will change their copyright policy and work together with P2P networks.

I mean look at the news, this band released their music on BitTorent, this company shared a special version of their game through file sharing network.  In few years this will be normal and for copyright holders P2P networks will become an ally and not an enemy.

Ashley Highfield?

Who is Ashley Highfield? Only the man who as director of future media and technology at the BBC did more than anyone else to push the iPlayer through from being a mere concept to a reality.

Highfield left the BBC shortly after the iPlayer launched to become managing director of consumer and online at Microsoft U.K. While there he has helped launch the MSN Video Player, which quite frankly pails into insignificance against the iPlayer.

Highfield Talks

Highfield was speaking last week at C&binet, the government’s digital creative industry conference. According to The Guardian newspaper, he said:

“I think the iPlayer was a catalyst to get a lot more content [made available on-demand] in the UK. All boats rise on that, commercial or not. A reasonable question to ask now is about ‘windowing’. Is seven days free right or should it be shortened [and should the BBC] get rid of hold-back periods [so commercial companies can more quickly exploit online TV revenues from content]?”

A Change Of Mind

It’s clear just from this short statement that Highfield’s opinion on these matters has changed since he moved from the public broadcaster to a private company in Microsoft.

I’d suggest his comments are intended to move BBC content into the commercial sector more quickly than it is now. The MSN Video Player is full of archive material but if the iPlayer charged for content then it would instantly enter that competitive world.

Conclusions

It feels as though all the companies offering free TV services at the moment are considering charging. That’s not the case, of course. This hasn’t come directly from the BBC and I doubt it will ever actually charge for content. First and foremost it would risk a backlash from British citizens who already pay a TV license fee to access BBC shows.

Hulu, on the other hand, is likely to start charging in the next year or so. But even that is likely to only be for certain, selected content rather than a flat charge for the whole service.

Still, it’s a worrying trend for those of us who have got used to watching free TV services on the Web.

Netflix Of The Past

When Netflix formed in 1997 as a DVD by mail company in the United States, the Internet wasn’t the behemoth it is now, and online video was a concept rather than an actual living, breathing part of the Web.

Streaming video therefore wasn’t part of the plan for the company at that point. However, it introduced ‘Watch Instantly’ as part of its subscription service a few years ago and hasn’t looked back since.

Streaming Over DVD

Although DVD by mail is still Netflix’s main business, the ‘Watch Instantly’ feature is an increasingly important and popular part of it.

In the Q3 earnings report, CEO Reed Hastings revealed that 42 of subscribers have streamed at least 15 minutes of content from Netflix in the last three months. Which is a phenomenal result.

This followed a pronouncement earlier this month that DVD will only be the “primary delivery format” at the company for the next two years. While it wasn’t stated whether the move would be to Blu-ray or streaming, these results would suggest the latter is more likely.

International Plans

Netflix is currently a U.S.-only operation, but that looks like it could be changing in the very near future. As part of the earnings call, Hastings said:

“We’re looking to the second half of 2010 to make our streaming offering international. The plan is to start small in one market, prove out our model, and expand into other countries.”

This would be a streaming-only option, with hastings suggesting that postal systems abroad make that part of its business impossible. No country was mentioned as being first on the list but one with a high broadband take-up would be the most logical.

Hastings implied that a streaming-only subscription option wouldn’t be coming to the States anytime soon, which somewhat goes against what he said in February of this year.

Netflix Of The Future

Netflix’s ‘Watch Instantly’ is already available on a number of devices, including hybrid Blu-ray players, the Roku box, and the Xbox 360. But more are likely to follow, with the PS3 and Wii surely top of the list.

So the Netflix of the future is likely to be as much about streaming content as it is about physical media, available in countries other than the States, and a well-known component on a range of Internet-enabled devices.

This is a company going places in more ways than one.

YouTube Is Go

In February of 2005, a site popped up on the Internet that would cause a massive shift in how video is served on the Web. It would ease the process, and provide a platform for video of all kinds, mostly user-generated content.

Its name, if you hadn’t already guessed, was YouTube. And it has grown in the last four years to become one of the biggest and most popular sites on the Web, with millions of people from all corners of the world visiting and using the site on a daily basis.

Google Come Sniffing

In November 2006 when Google decided to buy the site, it was only a relatively small success, and it had a bunch of problems. The main one, of course, was the amount of copyrighted material turning up on the site. Viacom got so annoyed with this that it’s suing for $1 billion.

Google paid $1.65 billion for YouTube, a figure which made most people do a double take. Many thought the sale would start the Web 2.0 bubble, and it kind of did, but no site has sold for quite that amount since, especially one which was still in its infancy.

Schmidt Comes Clean

Now it has emerged that even Google CEO Eric Schmidt thought YouTube was overpriced at $1.65 billion. In fact, he considered the site to be worth in the region of between $600 million and $700 million. Meaning Google paid around $1 billion more than it should have.

According to CNET, Schmidt revealed his thoughts on the matter in May during a deposition he gave as part of the Viacom lawsuit. He said:

“I believe YouTube was worth somewhere around $600 million to $700 million.”

“This is a company with very little revenue, growing quickly with user adoption, growing much faster than Google Video, which was the product that Google had. And they had indicated to us that they would be sold, and we believed that there would be a competing offer–because of who Google was–paying much more than they were worth.”

“In the deal dynamics, the price, remember, is not set by my judgment or by financial model or discounted cash flow. It’s set by what people are willing to pay. And we ultimately concluded that $1.65 billion included a premium for moving quickly and making sure that we could participate in the user success in YouTube.”

Conclusions

Clearly Google wanted YouTube and didn’t want anyone else getting hold of it. And they were willing to pay a premium for the site. Which they definitely did. But has that price now justified itself?

In terms of revenue, no, although Google is still experimenting with options for making money from YouTube, and so it could end up paying out. But in terms of getting millions of people visiting a Google branded site every day, yes, very much so.

Dr. Horrible’s Sing-Along Blog is a Web series turned short film that has turned heads by being a truly phenomenal success. Now, Joss Whedon has confirmed a Dr. Horrible 2 and talked about creating a digital studio. Web video is growing up.

Dr. Horrible Is Born

Dr. Horrible’s Sing-Along Blog was created by Joss Whedon (best known for Buffy The Vampire Slayer) during the Hollywood writers strike of 2007/2008. Unable to write for any studios, he decided to finance and produce his own series meant just for the Web.

The result was a three-part series created for around $200,000 by Joss Whedon, his brothers Zack and Jed, and Maurissa Tancharoen. The original aim was to ensure the show broke even so everyone could be paid and walk away happy. But much more than that was achieved.

Monetary Success

The show premiered on its own Web site, with hosting via Hulu (where it is still available), in July, 2008. The site crashed under the strain of everyone eager to watch the series while it was still free.

A few months later and Dr. Horrible’s Sing-Along Blog was made available on Apple iTunes. It has since also made its way to Amazon Video on Demand.

The 42-minute short has since been released on DVD with a huge collection of extras. Forbes has estimated the show has now grossed $2.5 million, 12 times the production costs, which is a great result by any standard.

Dr. Horrible 2?

There have been many rumors of a sequel since then. And in an interview with TV Guide, Whedon has now confirmed a Dr. Horrible 2 is on its way, although the timing and budget of the project have yet to be decided. He said:

“The main question, he says, is whether he does it ‘on a shoe string again’ or goes bigger budget and ‘invites other people into the process.’ Either way, he promises that it won’t affect the storyline.”

Tube Filter suggests that “other people in the process” alludes to Whedon’s plans to create a digital studio which he would hawk around Hollywood. If a go, this could mean four original Web series produced every year, both by Whedon himself as well as others.

The Future Of Web Video

The success of the first Dr. Horrible’s Sing-Along Blog and plans for a sequel and more original Web series show how firmly Whedon believes the Internet is where the future lies, especially for unique ideas that likely won’t be wanted by movie studios or TV networks.

While it’s true that a DVD release was still required to truly make this kind of money, the buzz all happened online. And Dr. Horrible’s Sing-Along Blog even won an Emmy award at the weekend. Web video is definitely growing up and growing more important.

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Hulu – Hot and Getting Hotter

Being British, I’m jealous of Americans for one reason and one reason alone – Hulu. Yes, we get to watch BBC programming on the iPlayer, and there are a number of other online TV catch-up services either already present or about to launch in the U.K. But Hulu offers American television at its best.

Hulu is massively popular in the States, having around 40 million viewers at the last count, who between them watched nigh on 500 million video streams. Which is surely cause for celebration amongst the partners behind the project.

Viewing Figures Vs. Revenue

However, viewing figures will only get you so far, with it all coming down to revenue and profit in the end. And on this score Hulu is still failing to score big. It’s estimated that the company will make losses of around $33 million from expected revenue of $164 million in 2009.

And this clearly isn’t pleasing the head honchos at NBC, News Corps. or Disney, the last partner to join. In particular, and rather unsurprisingly, News Corps. chairman Rupert Murdoch doesn’t seem to enamored with the current situation. And NBC Universal CEO Jeff Zucker agrees.

Content Partners Speak

According to Multichannel News, both spoke at the Goldman Sachs Communacopia conference on Sept. 15. Murdoch started by suggesting that Hulu is being eyed with alternative forms of revenue channels in mind. He said:

“Are we looking at it with a view toward adding subscription services and pay per view? Yes we are. No decisions have been made yet.”

While Zucker seemed less sure pay models were the future but also didn’t rule them out, particularly in the long-term. He said:

“I don’t think anyone predicted we would be this far along after 18 months. We are ahead of plan and we have more than 200 advertisers at Hulu.”

“We are going to continue to be as innovative as anyone on monetization of the ad-supported model, that’s really where our focus is today.”

“Whether there are other ways to monetize Hulu down the road, it is something that we are open to, something we will explore, but there are no plans at this time.”

Could A Pay Hulu Work?

There are clearly people out there willing to pay for content over the Web, with streaming rentals and digital copies selling well across the Internet. However, that’s not how Hulu has been set up and I can see a lot of people dumping the service without a second thought if they were suddenly asked to pay for the privilege of using it.

It’s likely to be many years before online video advertising catches up with TV revenue, if ever. But does that mean the advertising-based model should be abandoned? Especially as top-rated shows such as The Simpsons and CSI can command higher CPM advertising rates on Hulu and the like than they can on traditional TV.

Is this correct or is the Microsoft executive who also launched the BBC iPlayer merely showing his anti-Apple bias?

Ashley Highfield

Ashley Highfield is a man who knows what he’s talking about when it comes to consumer technology and online video. He formerly oversaw the launch of the BBC iPlayer service, initially only on Windows, and was the CEO of Project Kangaroo, the joint venture between the BBC, ITV, and Channel 4.

He is now the UK Managing Director of Microsoft (Consumer & Online) and looks after Windows, Bing, Messenger, Hotmail, and more besides. He also oversaw the launch of the MSN Video Player recently, which brings archive television shows to the Web.

TV Industry Ventures Online

The TV industry has been slow in adopting the Internet as a legitimate place to sell its wares. This is partly down to a desire to keep the status quo going and partly because there just isn’t enough revenue on the Web at present. Advertising rates are increasing but not fast enough for execs to take note.

But does this mean the television industry is going the same route as the music industry did? Which, for those who don’t know, let the situation escalate until piracy got out of hand and whose failure to embrace the Internet meant Apple became the be all and end all with its iTunes service.

Highfield Speaks

Highfield believes this is a danger, telling The Guardian of his fears that the TV industry is facing an “iTunes moment” similar to the one faced by the music industry a few years ago.

He suggests that unless the TV industry “aggressively move its content online” and builds “a critical mass of content that the traditional buyers of airtime will understand and buy into,” that the time to act may come and go, leaving Apple in prime position to pick up the pieces.

He said:

“So realistically I think the industry has about two to three years to adapt or face its iTunes moment. And it will take at least that long for media brands to build credible, truly digital brands. But, importantly, I do believe TV does have a small two to three year window in which to respond.”

Conclusions

I agree with Highfield that the TV industry needs to act sooner rather than later so as not to miss this opportunity to embrace the Web and shape how people legally consumer television content online.

However, I don’t see Apple as the big, bad wolf that Highfield does. I think that’s more borne out of the Microsoft line which sees everything Apple does as bad. And that’s really not the case.

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International Plans

Hulu has reportedly had plans to roll-out internationally for a while. In March, the company hired a senior vice president of international operations whose role was described as being “responsible for leading Hulu’s expansion efforts outside the United States.” Then in May, these plans to expand outside of the U.S. borders were revealed.

There were newspaper reports at the time stating that Hulu was in negotiations with several large British broadcasters, including ITV and Channel 4. The plan was to make the UK the first port of call in an international roll-out of Hulu. Each country would get a localized service, with some American shows available alongside shows from that territory.

Hulu Confirms Plans

Now, The Telegraph has revisited the story after Hulu made its plans for an international roll-out clearer. Johannes Larcher, the SVP mentioned earlier, spoke this week at the Future of Broadcasting conference in London. He confirmed the plans for a Hulu UK launch, but would not be drawn on possible content partners or when the service was likely to launch.

He also spoke about the possibility of offering high quality streaming video and stated that Hulu was willing to discuss its plans with British ISPs in order to make this a reality. Which is important because ISPs in the UK already aren’t happy with the amount of bandwidth taken up by the BBC iPlayer. A UK version of Hulu really would be the icing on the cake for them, especially is programs were offered in anything close to HD.

Johannes Larcher Speaks

Larcher said:

“We are talking to everyone. The UK is our number one priority in terms of international expansion. We are very interested in the UK. We hope in the very near future we will have some plans to reveal for the UK. [The] UK is very ready for a product like Hulu.”

A Kangaroo-Sized Gap In The Market

Larcher also admitted the rather obvious assumption that Hulu was moving into the UK market to cash in on the collapse of Kangaroo, the joint online video project between the BBC, ITV, and Channel 4. Which makes the Competition Commission’s decision to forcibly kill off the project look even more ludicrous than it did already. Doing so has effectively left a gap in the market which an American company is going to exploit.

Conclusions

Hulu has been very successful in the States and will undoubtedly be just as successful in other territories. The UK is the obvious country to start this roll-out as the iPlayer has opened many people’s eyes to the world of premium online video catchup services. And of course the death of Project Kangaroo means there are broadcasters likely to be very willing to climb on board the Hulu Express.

The BBC has done a fantastic job of entering the world of online video with its television catch-up service, the BBC iPlayer, but the service is not without its problems, with two very large ones still to solve.

International Restrictions

The fact UK citizens have to pay a license fee to own a TV, all of which goes to the BBC, has helped the corporation enter the video on demand world more quickly and easily than rival media companies.

But that license fee also means the iPlayer is only available to British viewers, with those outside the UK effectively banned from using the service in the same way that those outside of the States are banned from watching any content on Hulu.

Huge Issue

I’ve written a couple of heartfelt pleas on this issue in the past and it seems that the message is finally getting through to the people in charge.

Erik Huggers, the director of future media and technology at the BBC recently spoke to The Guardian about his plans for the future of the iPlayer, and his main concern is about the artificially blocking international access.

“The internet is, by definition, a global medium, yet today we are artificially blocking international access to the iPlayer. That’s a problem, in my mind, and a big challenge for the industry.”

Multi-Platform Downloads

Huggers also wants to see the iPlayer’s long-running problem of only fully catering to Windows users solved by the end of the year, with a download manager compatible with every OS, an important move as 10 percent of iPlayer users are already Mac owners.

But Mac owners aren’t the only minority users, with iPhone, iPod Touch, and Wii owners also contributing the the numbers which make up the diverse range of viewers. Huggers said:

“The situations we’re seeing are interesting – mum and dad are watching linear TV in the living room but kids are watching in a different way … on the iPhone, iPod Touch or laptop.”

The Future Looks Rosy

Huggers also wants more social media elements, rapidly becoming a staple of Web video sites, added to the BBC iPlayer website in an attempt to connect the members of the audience.

The iPlayer is already very successful and showing how a video on demand television catch-up service should be implemented and run, but these ideas could take it to another level altogether.