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YouTube without Bootlegs… Where’s the Business?

“Like our peers in the media industry, we are focused on finding the right business model for professionally created content to be legally distributed on the Internet. We want our audiences to be able to access our programming on every platform and we’re interested in having it live on all forms of distribution in ways that protect our talented artists, our loyal customers and our passionate audiences …” said Viacom officials in a written statement as they insisted that YouTube purge thousands of files containing videos from The Daily Show, The Colbert Report, South Park and MTV to name a few. As far as I know, YouTube did their best to comply and, in fact, did purge thousands of files from their servers.

One source at Viacom, who asked to remain anonymous, told me that they were”… doing their best to figure this stuff out,” and that in their opinion”… some kind of a deal will eventually be worked out.”

Of course it will. After all, isn’t every content company trying to figure out how to let consumers have access to all of their content for free without having any technology to measure usage or get paid? It does get a bit tricky. (Although less so than you might think.) But that’s not really what we’re discussing here.

As you know, Google just spent $1.65 Billion for YouTube. Mark Cuban said it was a really stupid deal, I said it was the birth of a new art form. Can we both be right? No, but, with all deference to my friend Mr. Cuban, YouTube’s value is not as a repository of long form video. It is a very good way to distribute or associate yourself with short video clips. That is where the business can be most profitable to Google (and everyone else).

Not to over-tech this column, but YouTube serves video in Adobe’s Flash format. The compression algorithms used by Flash make it perfectly suited as a delivery mechanism for short video clips that are supposed to be viewed in a small window on a computer screen. If you expand the viewing area to “full screen” the image quality almost always becomes pixelated and unwatchable. There are many reasons that Flash Video files have become a popular format for short clips that need to be distributed over the Internet. But, the main reason is that if you created a file of similar resolution (perceived image quality) in all of the popular video file formats – the Flash file would be the smallest and therefore the most inexpensive to serve.

As I said, this attribute makes Flash files perfectly suited for the distribution of short video clips. It does not, however, make it well suited for the distribution of full-length shows. Watching a 44 minute (one network hour sans commercials) in Flash format on YouTube means that you are trapped at your desk in a broadband-enabled environment and that you have absolutely no other way to see the content. This surely happens, but it is a sub-optimal, emotionally un-satisfying way to view anything longer than a few minutes.

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So, let’s leave long form content out of this discussion and move on to copyrighted material under 10 minutes in length. As it turns out, almost all television content is perfectly crafted to be broken up into Acts. That’s how the shows air. You have to remove the commercials anyway, so the editing is a breeze. The only problem here is translating the value of having the clips ubiquitously available online. This is also less difficult than you might think. But, as evidenced by the Viacom writing, this subject is causing a great deal of angst in the short term.

I think this time – unlike the recorded music industry’s Napster fiasco – the video industry will recognize that short and long-format clips have quantifiable values and they will work quickly to develop business models that will satisfy all interested parties.

What if they don’t?

Well, if these negotiations fail (and they might) we will be treated to a recorded music industry redux. Anarchistic consumer control will rule and the brands will suffer the consequences. If you need your South Park fix online and you can’t get it from YouTube, you’ll go to metecafe.com or collegehumor.com or any one of a thousand websites that feature all of your favorite bootleg content absolutely free.

YouTube has become a household word for consumers and on Wall Street, but these are not the people whose culture created it. YouTube’s value is (was) created by bootleggers (conscious and unconscious – remember, the average person does not have a clue about copyright laws or when they are actually violating them) who have been given free tools to move video around the Internet. These are not ordinary consumers and they don’t have loyalty to individual “brands” of websites any more than they have loyalties to NBC, CBS, ABC or Fox. Can you imagine a viewer anywhere in America who would say, “I won’t watch that dramatic hour because it is not on NBC.” Of course not. If the bootleggers can’t find what they want on YouTube, they’ll simply download and share from other sites.

So what did Google buy? Well, obviously they bought the rights to make deals with content owners and defend copyright infringement lawsuits. They also bought a site that was overwhelming populated with content that was owned by others. But, they also bought a way to capitalize on the very real video sharing, social networking, community of interest trend that is truly just beginning.

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Can YouTube survive and prosper without bootleg content? It is certainly going to be a struggle. If they keep taking copyrighted material off of YouTube, you can look for an alternative bootleg-oriented organization to fill the space post-haste. The Internet hates a vacuum.

About the Author: Shelly Palmer is an award-winning composer and producer of music for advertising, film, television and radio, and a pioneer in the fields of digital audio and Internet technologies.

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