They say YouTube isn’t making any money. Its bread and butter is user-generated content, although it has managed to draw partnerships with some major Hollywood content providers, such as Fox and Warner Bros. Nevertheless, the money is supposed to be sparse. Then you have Hulu, which got started with content from some of the major players, like NBC Universal and Fox, right off the bat. Hulu is, according to the word on the street, doing very well. And so what we’re looking at is two models, UGC and content from mass media. In other words, a site catering to social media vs. a site catering to mass media (or, instead of simply saying “mass media”, we mean the lumbering, late arrival of mass media content providers to the social media space).
UGC vs. Hollywood
YouTube is the de facto place for UGC, and Hulu is becoming the de facto home for Hollywood content (at least until the cable and satellite carriers solve all of their on-demand problems, then you can kiss Hulu goodbye). And, not surprisingly, the UGC heavy YouTube is in the red, perhaps because it lacks the gloss and production value of Hulu’s content – but really, it’s because social media just isn’t that profitable. But, as an aside, I think that social media is unprofitable thus far because of poor management, not because its just impossible to capitalize on. If one popular service goes away, something else will crop up in its stead.
So, how do you make money with YouTube?
UGC vs. Hollywood
No, that’s not me repeating myself. Bringing together UGC and Hollywood content is what YouTube is trying to do. But hosting the latest episode of Lost on YouTube is never going to compete with that same episode on Hulu. It’s just too late.
So, what the heck do I mean by “UGC vs. Hollywood”? Well, there does exist a viable model where UGC and Hollywood are not treated like oil and water, where all participants in the social media space, little guy and Hollywood, get to face one another down.
Funny Or Die
Will Ferrell, Judd Apatow, Adam McKay, and Chris Henchy have figured it out: funnyordie.com. It is effectively Hulu and YouTube combined, at least in terms of the comedy genre, probably the most important genre in web culture. Funny Or Die effectively provides content from users as well as major Hollywood content providers. Ferrell, et al., have crafted a social space where users vote up or vote down content posted by celebrities as well as average users, competing side by side. You, Joe Average or Hollywood Hero, or just Aunt Ethel, are either funny or, well, your stuff dies. It presents a level, realistic playing field of UGC blended with Hollywood content (at least, Hollywood content produced with so-called “amatuer aesthetic”) where everything competes together for viewership. If there is UGC that is just hands down as good, if not better than, or more deserving than, celebrity content, then new web celebrity is invariably created for that user. And traffic flocks to the site, things get shared, and life is good. Yes, funnyordie’s structure is not one of “personal broadcast” the way that YouTube works, but on-line crowds follow good content. YouTube needs good content, not billions of videos with ten views.
So, what should YouTube do?
Remove all those zillions of videos that don’t deserve to see the light of day. If social media users want to share videos, they can post them to Facebook, MySpace, and other sites. Doing so, YouTube can raise its profile and save loads of money on server space, if they enable a voting system akin to Funny Or Die’s. Give people the expectation that their content should be worth something better than life in the margins. I’d even gladly hold myself to that standard. Leave the small videos on social networks like Facebook or Myspace.