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Sun, Oct 01, 2006 - Page 12 News List

YouTube looking to attract mainstream ads

Joint founder of the Web site, Chad Hurley, says there is more to it than piracy but some experts are not so sure

NY TIMES NEWS SERVICE , NEW YORK

Actress Jessica Rose played fresh-faced teenager ''Lonelygirl15'' who became the obsession of millions of devotees on YouTube.

PHOTO: NY TIMES NEWS SERVICE

Chad Hurley effects a calm, almost detached demeanor, even as the Web site he runs, YouTube.com, has provoked a frenzy of consternation among executives of record labels, TV networks and movie studios. For millions of Internet users, the site that opened to the public less than a year ago provides a daily fix of odd and interesting video clips, from White House speeches to frat house pranks.

YouTube has also become a vast repository of video taken without permission from television shows and movies, not to mention home movies constructed -- with nary a cent paid in royalties -- from commercial music and imagery.

Hurley was surrounded by curious media executives at Allen & Co's annual Sun Valley mogulfest in July. They wondered, friend or foe?

Is he earnestly working to make YouTube and its exuberant users conform to the existing standards of copyright law and contractual obligations? Or is he cynically flouting the law to enable YouTube to grow rapidly, figuring he will be able to cut a more advantageous deal later, or perhaps sell the company to someone else who will be able to sort through the mess of liabilities?

In an interview this week, Hurley, not surprisingly, portrayed himself as mainly trying to improve the site for its users while working to find arrangements that would satisfy Hollywood.

"There's going to be bumps along the way, but we're trying to make an effort to make the new model work for everyone," he said. "We've been developing features and working on the problem. I don't think we have been just sitting back and just buying fancy furniture."

YouTube has started to attract mainstream advertisers and the site has become financially stable, Hurley said, despite the huge cost of showing more than 100 million video clips a day.

Hurley pointed to a deal signed recently with Warner Music that he hoped would be a model for dealing with Hollywood and record companies from now on. YouTube is developing technology that will identify Warner music used in video that is uploaded. When the site plays those videos, it will share some of its advertising revenue with Warner and others with copyrighted material that is used.

Moreover, Hurley says, there is much more to YouTube than piracy. And professionals are creating programs specifically for YouTube: The recent series of clips posted under the name Lonelygirl15, for example, showed an actress pretending to be a disaffected teenager.

Others are not so sure. Doug Morris, the chief executive Universal Music Group, said at an investor conference recently that YouTube and MySpace, the social networking site, "are copyright infringers and owe us tens of millions of dollars."

And Mark Cuban, who founded Broadcast.com, an early Internet video site that was bought by Yahoo, argued on his blog that YouTube does not have a viable business other than piracy.

"It is absolutely reminiscent of Napster," Cuban said in an interview. "It's nice that they say `it's different this time,' but it's not."

Cuban argues the deal with Warner is unworkable because it is too complex, with so many parties with potential claims on videos.

Alex Zubillaga, Warner's executive vice president for digital strategy, said in an interview that these problems could be solved. "This is a framework that allows us to monetize our assets while we unleash the creativity of the user," he said.

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