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YouTube Expands Its Horizons, and Its Video Time Limits

October 22, 2008

By Jefferson Graham

SAN BRUNO, Calif. — YouTube, the world’s most popular video-sharing site, grew to dominate the field with a collection of funny amateur videos, political gotchas and unauthorized TV and movie content.

The new YouTube, more popular than ever, has a different look. Much, but not all, unlicensed content is gone, replaced by approved material from such producers as CBS, HBO, Showtime, Sony Television and Lionsgate.

Google-owned YouTube also has tossed aside its 10-minute-video limit rule. It is running full-length episodes of TV shows, starting with a test of three CBS-owned shows: Star Trek, MacGyver and Beverly Hills, 90210. The moves are a response to competition from sites offering full-length videos including Hulu, Veoh and blip.tv, which are gaining traction with viewers.

“YouTube is a clip culture,” says Jordan Hoffner, YouTube’s director of content partnerships. “But we saw that there was a demand for longer form, and a market that’s growing, so we decided to try it.”

YouTube last week showed its first full-length Hollywood “studio” film on its Screening Room channel for independent filmmakers. Director Wayne Wang’s (The Joy Luck Club) two-hour The Princess of Nebraska, from Magnolia Pictures, has attracted over 150,000 views already.

Screening Room launched in June to feature film festival offerings, mostly short films. For non-pros, YouTube has a 10-minute limit on uploaded videos, but Hoffner says he hopes to have more longer films showing by the end of the year outside of Screening Room.

YouTube so rules online video that it showed 5.3 billion videos in September, according to measurement firm Nielsen Online. The closest runner-up was Yahoo, with 264,266 video streams.

But as YouTube has grown even more popular, Hollywood has gone to great lengths to create and nurture video alternatives, says Phil Leigh, an analyst at Inside Digital Media.

Hulu, launched to the general public by NBC Universal and News Corp.’s 20th Century Fox in March, was the sixth most popular site for video in September, according to Nielsen, with 142,261 streamed videos.

It offers Internet favorites such as clips and full episodes of Saturday Night Live, Family Guy and The Simpsons. And like YouTube, it offers tools to share those clips on websites and blogs.

YouTube’s most viewed entertainment channel is from partner CBS — clips from Late Show with David Letterman, sitcoms, news and sporting events. Competing sites Veoh, Fancast and AOL tout their own partnerships for clips and full shows from CBS, NBC, Fox and ABC.

Hoffner says he isn’t bothered that YouTube doesn’t have NBC, ABC and Fox.

“We’ve got thousands of partners,” he says. “We’re talking with everybody.”

When YouTube began, Hollywood was infuriated that so many unauthorized clips ran next to homemade videos. Viacom, owner of Paramount Pictures, MTV and Comedy Central, responded with a $1 billion copyright infringement lawsuit against YouTube that has yet to go to trial.

Leigh ties the absence of NBC, Fox and ABC from YouTube to the lawsuit. “The networks are waiting to see what happens,” he says.

In late 2007, YouTube tried to deal with Hollywood’s concern by launching a system to deal with fan clips. Once the copyright holder identifies the clip and contacts Google, they are offered two choices: have the material taken down, or let YouTube place ads on the clip, and split the revenue. YouTube says 90% choose the revenue option.

Drumming up revenue

Google doesn’t break out results for YouTube, which it paid $1.7 billion for in 2006, so its profitability is a mystery. Google execs say that the unit is profitable but has a ways to go.

“We’re working but have not yet, in my view, gotten a breakthrough around monetization,” Google CEO Eric Schmidt told CNBC earlier this year.

Forrester Research analyst James McQuivey says advertisers have been reluctant to spend big dollars on YouTube. Instead they prefer the more targeted ad approach on sites such as Hulu and ABC.com, where people come to watch specific shows.

“If you’re an advertiser, where will you put your money?” he says. “In front of content you’re not sure about, or behind a series like 30 Rock, a known brand?”

YouTube initially shunned “pre-rolls” — TV-like commercials that run before a video clip — in favor of embedded clickable links that didn’t interrupt the flow of the program.

Madison Avenue prefers pre-rolls, McQuivey says.

But for the Star Trek, MacGyver and Beverly Hills, 90210 TV episodes, YouTube has gone totally traditional, offering old-fashioned pre-rolls that can’t be paused, fast-forwarded or even muted.

“The ads match this type of professional content,” Hoffner says. “Our advertisers tell us what they want.” (c) Copyright 2008 USA TODAY, a division of Gannett Co. Inc. <>




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