Tag Archives: youtube

When will we see the first $1.5 billion valuation of a YouTube network?

stylehaul

Want to know how smart a bet Google made when it purchased YouTube for $1.5 billion in 2006? Independent companies that were built almost entirely on YouTube’s platform are being sold for nearly that same amount.

In March, Disney acquired Make Studios, a network of over 50,000 YouTube channels with close to 400 million subscribers, in a deal that could value the company up to $950 million. Then in September, an investment group took a stake in Fullscreen, a network with 3 billion monthly video views, that valued the company between $200 million and $300 million. And finally StyleHaul, a network that specializes in beauty and fashion shows, was acquired for a $150 million valuation. As Digiday’s Eric Blattberg  put it, “It’s a good time to run a big YouTube network.”

Here’s another way to put these valuations in context. Fullscreen, a company launched in 2011 and distributed on a platform less than a decade old, is valued higher than what the Washington Post went for when it was sold to Jeff Bezos.

How did we go from prognosticators worrying that YouTube would always be a loss for Google to massive valuations and revenue for both YouTube and companies that use it for distribution? Well, you could probably point to December, 2010, when the company launched pre-roll advertisements. Before that, it was only running Adwords-like text ads. With that move, brands that were already spending millions to develop television commercials could simply re-purpose those same commercials on YouTube at mass scale.

Vevo and its backers also deserve a lot of credit for their prescient early YouTube strategy. For decades, music labels had been giving away their music videos to MTV and VH1 for free (for marketing purposes) and the executives at Universal and Sony were determined to do a better job at monetizing the web. So they created an online networks that distributed their signed artists’ music videos mainly on YouTube. That’s why if you watch a music video on YouTube today, it likely has a Vevo logo on it.

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The move paid off. As of 2012, Vevo was bringing in an estimated $280 million in annual revenue and receiving 3.1 billion views a month. It began looking for more backers at a valuation between $700 and $800 million. And in 2013, Google took an official stake (likely over worries that Vevo would otherwise move its network over to Facebook), that valued the company at $700 million. No doubt having so many music stars actively marketing themselves on YouTube paved the way for mainstream legitimacy, allowing other major media companies to invest in the platform.

With YouTube itself projected to generate $7.5 billion by 2015 and as much as $30 billion in just a few years, Google’s $1.5 billion bet on YouTube in 2006 may go down in history as one of the company’s smartest. I couldn’t help but compare it to the $30 billion Comcast paid for NBC Universal. How long until a YouTube network sells for that much?

Are you beginning to understand why news companies are suddenly investing so much in video?

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Simon Owens is a tech and media journalist living in Washington, DC. Follow him on TwitterFacebook, or LinkedIn. Email him at simonowens@gmail.com. For a full bio, go here.

YouTube needs to start worrying about Facebook video

key and peele

On a recent episode of Comedy Central’s Key & Peele, the duo produced a skit on the dangers of concussions in football. Shot in a hyper-dramatized, cinematic style, it shows Keegan-Michael Key playing a high school quarterback who’s been sacked by a defensive lineman, resulting in a concussion. Afterward, he tries to rally his teammates for the next play but digresses further and further into a state of complete gibberish and confusion as his brain turns to mush. It’s hilarious.

As Comedy Central has been wont to do lately after a show airs, it not only uploaded the skit to its custom video player, but also to YouTube and directly to its Facebook page (via Facebook’s video player). What happened next should worry the executives at YouTube.

To be clear, the YouTube version, with over 700,000 views, had the largest audience. But the Facebook version, with 200,000 views, is a not-so-distant second, and it represents the massive strides Facebook has made at growing its video offering into a formidable opponent to YouTube.

Just a few short years ago there were basically three kinds of video you encountered on the internet: YouTube, Vimeo, and various custom platforms used by entertainment and news sites. The custom players were often clunky and had limited viral spread. Though some had embed features, allowing one to embed the video on his own website, they weren’t very intuitive. Vimeo has always been a beautiful product and has a hardcore fanbase of documentary and short filmmakers, but it’s a rather niche platform that never seemed to pose much of a threat to YouTube. So for seven or so years, YouTube was the reigning king of online video, with no other company even approaching its viewership numbers.

Facebook’s video player has been available for a few years now, and I remember uploading videos to it back in 2012 or 2013. The tool was glitchy, sometimes taking multiple attempts to upload something. And encountering Facebook video in the newsfeed was a somewhat rare occurrence.

Due to a confluence of events in just the last few months, however, that scenario is much different, and now it’s nearly impossible to scroll through the Facebook newsfeed without seeing video. So what changed?

Well, Facebook obviously began to favor video in its newsfeed algorithm, emphasizing it over text, image, and link content. And once Facebook page owners realized this by viewing their analytics dashboard, they had an incentive to start uploading more video. Facebook also started to auto-play video, making it harder to ignore (and also possibly inflating viewership stats, which I’ll get to in a second). And then lastly we had the Ice Bucket Challenge, the month-long viral campaign to raise money for ALS. Not only did it crowd the newsfeed with videos, it also allowed millions of casual Facebook users to upload video to the social network for the first time.

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It also helps that Facebook has, at last count, about 1.2 billion users. And it turns out many of those users are consuming video. The company recently announced that it’s serving 1 billion video views a day. It’s hard to find an apples to apples comparison for YouTube, but back in 2012 YouTube announced it was seeing 4 billion views a day, and we can only assume that number has grown considerably since then. An executive from web analytics company ComScore recently claimed that Facebook video had surpassed YouTube views on desktop, but this should be met with a skeptical eye, since this includes auto-plays, and Facebook auto-plays every single video in the newsfeed regardless if you stop to watch it.

Still, there are enough eyeballs for Facebook that it can now make serious inroads in luring stars off YouTube. Recently it has reached out to some of YouTube’s most famous personalities, offering them higher ad rates and significant advances if they leave YouTube and come to Facebook. It knows that these stars can create a domino effect, leading to other midlist stars trying out the platform. At the very least, if it can get some of these stars to cross-post their videos to their Facebook pages rather than simply embedding links to YouTube (what Comedy Central is currently doing with Key & Peele), then this could become a gateway drug to convince them to start investing more in Facebook and less in YouTube. And as Hameed Yousuf recently pointed out, the way Facebook displays videos uploaded natively vs embedded YouTube links is vastly different; the latter has far less visibility in the newsfeed.

That all being said, Facebook video still has significant weaknesses. For instance, though it works well within Facebook’s ecosystem, it doesn’t get much play outside of Facebook. I can only remember one or two times when I came across a Facebook video embedded on a blog or news site. YouTube is still the default tool for easily embedding video.

But even more important is the fact that it’s incredibly hard to discover Facebook video. Facebook’s internal search functionality sucks, and the site isn’t crawled well by outside search engines. YouTube’s search is amazing, and it’s the second most popular search engine in the world next to Google. And speaking of the G word, it’s the elephant in the room. Because it owns YouTube, it can not only crawl its metadata more efficiently, but it can also give it preference in Google search results. Do a search for “Key & Peele, quarterback” in Google.  The Facebook video doesn’t even show up in the first page of results.

Facebook is now over a decade old. It kills me that it for some reason hasn’t figured out how to provide a valuable search tool, something Twitter developed long ago. It keeps hinting that it will, but it’s forever on the horizon. Look what happens when I try to use its semantic search to search public posts for mentions of Key & Peele:

facebook search

“This search isn’t available yet,” an indication that someday, we don’t know when, but maybe, hopefully, we think there just might be a public search feature. Until that moment arrives, Facebook will always be hindered when it comes to discovery — for its video and any other type of content — a problem that the rest of the open web solved long ago.

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Simon Owens is a tech and media journalist living in Washington, DC. Follow him on TwitterFacebook, or LinkedIn. Email him at simonowens@gmail.com. For a full bio, go here.

How YouTube created the micro celebrity

A common facet of being a celebrity is that, in addition to your avid fan base, you’re often recognizable to people who aren’t your fans or who don’t even follow you that closely. I couldn’t name you a single Justin Bieber song but I know what he looks like and some general details about him. We even recognize B and C list celebrities on the street even if we can’t quite remember their names.

But YouTube is creating a new kind of celebrity: One who has millions of fans but is recognized by virtually no one outside of that fan base. Even someone like me, who spends a fair amount of time on YouTube every day, would never be able to recognize the vast majority of YouTubers who have over a million subscribers. Fast Company’s Sarah Kessler visited VidCon, an annual conference attended by thousands of screaming teens who flock en masse to get a glimpse of “celebrities” that few outside the conference have even heard of.

A sea of girls is hoisting cell phones into the air. It’s impossible to tell whether it’s a line or whether there’s something extremely interesting toward the center of the mob. A scream erupts from a far corner. “What’s happening?” I ask a tall blonde girl next to me. “I don’t know. Someone came out,” she says.

I wander over to the next group and poke my head into their circle for clarification. “Hey, is this a line?” I ask. It is a line–a line to get into other lines that will lead to specific YouTubers’ autograph signing booths once they open (the word is “YouTubers,” by the way, not “YouTube celebrities” or “YouTube stars”).

“Who are you here to see?” one girl asks. Nobody in particular, I tell her, you? “The British YouTubers.”

Who? There are enough successful YouTubers that it would be impossible to know every star, and one person’s hero can be, to another teenager, a total unknown. “You know, Jim Chapman, Alfie Deyes, Joe Sugg, Caspar Lee, Marcus Butler,” the girl says. I don’t know, and my blank expression is met with exasperated disbelief. It’s time to move on.