YouTube is a popular free video sharing web site which lets users upload, view, and share video clips. Founded in February 2005 by three employees of PayPal, the San Bruno-based service utilizes Adobe Flash technology to display video. The wide variety of site content includes movie and TV clips and music videos, as well as amateur content such as videoblogging. It is staffed by 67 employees. In October 2006, Google, Inc., announced that it had reached a deal to acquire the company for $USD1.65 billion in Google's stock. The acquisition is expected to close in the fourth quarter of 2006.
YouTube.com was founded by Chad Hurley, Steve Chen, and Jawed Karim, who were all early employees of PayPal. Prior to PayPal, Hurley studied design at Indiana University of Pennsylvania. Chen and Karim studied computer science together at the University of Illinois at Urbana-Champaign. The domain name "YouTube.com" was activated on February 15, 2005, and the website was developed over the following months. The creators offered the public a preview of the site in May 2005, and six months later, YouTube made its official debut.
The company's humble beginnings in a garage and commitment to offering free services necessitated outside financial backing. In November of 2005, venture capital firm Sequoia Capital invested an initial $3.5 million; additionally, Roelof Botha, partner of the firm and former CFO of PayPal, joined the YouTube board of directors. In April 2006, Sequoia put an additional $8 million into the company, which had experienced a boom of popularity and growth in just its first few months.
At present, YouTube is one of the fastest-growing websites on the World Wide Web, and is ranked as the 10th most popular website on Alexa, far outpacing even MySpace's growth. According to a July 16, 2006 survey, 100 million clips are viewed daily on YouTube, with an additional 65,000 new videos uploaded per 24 hours. The site has almost 20 million visitors each month, according to Nielsen/NetRatings, where around 44% are female, 56% male, and the 12- to 17-year-old age group is dominant. Youtube's pre-eminence in the online video market is staggering. According to the website Hitswise.com, Youtube commands up to 64% of the UK online video market.
On October 9, 2006, it was announced that the company will be purchased by Google for US$1.65 billion in stock, which will be Google's biggest purchase to date. The purchase agreement between Google and YouTube came after YouTube presented three agreements with media companies in an attempt to escape the threat of copyright-infringement lawsuits. YouTube will continue to operate independently, and the company's 67 employees and its co-founders will continue working within the company.
Word spreads and traditional media take notice
In its short time on the web, YouTube has grown quickly and received much attention. Online word-of-mouth has been primarily responsible for YouTube's growth since its inception, and gave the site its first surge of publicity when it hosted the popular Saturday Night Live short Lazy Sunday. However, YouTube's official policy prohibits submission of copyrighted material, and NBC Universal, owners of SNL, soon decided to take action.
In February 2006, NBC asked for the removal of some of its copyrighted content from YouTube, including Lazy Sunday and 2006 Olympics clips. The following month, in an attempt to strengthen its policy against copyright infringement, YouTube set a 10-minute maximum limit on video length (except for content submitted via its Director Program, which specifically hosts original material by amateur filmmakers). However, the real cutoff is 10:58. This restriction is often circumvented by uploaders, who instead split their original video into smaller segments, each shorter than the 10-minute limit.
Though YouTube had done its part to comply with NBC's demands, the incident made the news, giving YouTube its most prominent publicity yet. As the site continued to grow, NBC began to realize the possibilities, and in June 2006 made an unusual move. The network had reconsidered its actions and was announcing a strategic partnership with YouTube. Under the terms of the partnership, an official NBC channel will be set up on YouTube, showcasing promotional clips for the series The Office. YouTube will also promote NBC's videos throughout its site.
CBS, which had previously also asked YouTube to remove several of its clips, followed suit in July 2006. In a statement indicative of how the traditional media industry's perception of YouTube (and similar sites) has changed, Sean McManus, president of CBS News and Sports noted:
"Our inclination now is, the more exposure we get from clips like that, the better it is for CBS News and the CBS television network, so in retrospect we probably should have embraced the exposure, and embraced the attention it was bringing CBS, instead of being parochial and saying ‘let’s pull it down."
In August of 2006, YouTube announced that, within 18 months, it hopes to offer every music video ever created, while still remaining free of charge. Warner Music Group and EMI have confirmed that they are among the companies in talks to implement this plan. In September Warner Music and YouTube signed a deal, in which YouTube will be allowed to host every music video Warner produced while sharing a portion of the advertisement income. Additionally, user-created videos on YouTube will be allowed to use Warner songs in their soundtracks.
On October 9, CBS, along with Universal Music Group and Sony BMG Music Entertainment, also agreed to provide content to YouTube.
Before being bought by Google YouTube stated that its business model is advertising-based. Some industry commentators have speculated that YouTube's running costs — specifically the bandwidth required — may be as high as US$1 million per-month, thereby fuelling criticisms that the company, like many internet start-ups, did not have a viably implemented business model. Advertisements were launched on the site beginning in March 2006. In April, YouTube started using Google AdSense. YouTube subsequently stopped using AdSense. Given its traffic levels, video streams and pageviews, some have calculated that YouTube's potential revenues could be in the millions per month.
YouTube policy does not allow content to be uploaded by anyone not permitted by United States copyright law to do so, and the company frequently removes uploaded infringing content. Nonetheless, a large amount of it continues to be uploaded. Generally, unless the copyright holder reports them, YouTube only discovers these videos via indications within the YouTube community through self-policing. The primary way in which YouTube identifies the content of a video is through the search terms that uploaders associate with clips. Some users have taken to creating alternative words as search terms to be entered when uploading specific type of files (similar to the deliberate misspelling of band names on MP3 filesharing networks). For a short time, members could also report one another. The service offers a flagging feature, intended as a means for reporting questionable content, including that which might constitute copyright infringement. However, the feature can be susceptible to abuse; for a time, some users were flagging other users' original content for copyright violations, purely out of spite. YouTube proceeded to remove copyright infringement from the list of offenses flaggable by members.
On October 5, 2006 the Japanese Society for Rights of Authors, Composers and Publishers (JASRAC) had their copyright complaints regarding Japanese media on YouTube finalized. Thousands of media from popular Japanese artists (such as Tokyo Jihen and various other music including Jpop) were removed.
When CBS and Universal Music Group signed agreements to provide content to YouTube on October 9, they also announced that they would use new technology that will help them find copyrighted material and remove it.
TV journalist Robert Tur filed the first lawsuit against the company in summer 2006, alleging copyright infringement for hosting a number of famous news clips without permission. The case has yet to be resolved.
Use of acoustic fingerprints
On October 12, 2006, YouTube announced that because of recent agreements with high-profile content creators, they were now required to use anti-piracy software. The software uses an audio-signature technology that can spot a low-quality copy of a licensed music video or other content. YouTube would have to substitute an approved version of the clip or take the material down automatically. Analysts noted removal of content based on such a system might negatively impact user satisfaction.
On their 6:30 PM bulletin on June 1, 2006, ITV News in the UK reported that YouTube and sites like it were encouraging violence and bullying amongst teenagers, who were filming fights on their mobile phones, and then uploading them to YouTube. While the site provides a function for reporting excessively violent videos, the news report stated that communication with the company was difficult.
White House Office of National Drug Control Policy involvement
In September 2006, the Office of National Drug Control Policy (ONDCP) began running anti-drug PSAs through the YouTube System. In response, many YouTube users began uploading rebuttals and rating the public service announcements down. Since mid-September, the ONDCP has removed the ability to rate or comment on any of their PSAs as a result.
New York Times reports anti-U.S. videos
On October 5th, 2006, the New York Times reported on the proliferation of what they considered to be anti-U.S. videos on YouTube.
Zucker political ad
On October 10th, 2006, YouTube users flagged the political ad of noted producer, and former long-time Democrat, David Zucker as being inappropriate for viewers under 18. The ad criticized the Clinton administration and the Democratic Party as weak in protecting national security. Some questioned YouTube's flag--normally used to indicate material that is inappropriate for viewers under 18--though Zucker's ad contains nothing profane or pornographic. The GOP decided not to use Zucker's ad in the 2006 campaign, because it was considered "over the top." On October 12th, YouTube removed the age-verification page and no longer censored the video for viewers under 18.
YouTube's popularity has led to the creation of many YouTube Internet celebrities, popular individuals who have attracted significant publicity in their home countries from their videos. These memes have come from many different backgrounds. The most subscribed YouTube member, as of August 16, 2006, is Geriatric1927, a 79-year-old pensioner from England who gained notoriety within a week of making his debut on the site. For these users, the internet fame has had various unexpected effects. By way of example, YouTube user and former receptionist Brooke Brodack from Massachusetts has been signed by NBC's Carson Daly for an 18-month development contract. On the other hand, Australian user Emmalina's fame led to her computer being hacked and private information stolen from her computer, forcing her to remove her videos from YouTube. Most significant has been the uncovered fictional blog lonelygirl15, now discovered to be the work of New Zealand actress Jessica Rose and some film directors.
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