SBJ/July 24 - 30, 2006/This Weeks News

YouTube: Love it or fight it?

Just hours after Shane Mosley knocked out Fernando Vargas on July 15, an illegal 33-second clip from HBO’s pay-per-view broadcast was uploaded to YouTube.com.

Four days later, the clip was still posted on the wildly popular site, and more than 180,000 people had watched it. Another 20,000 or so watched a three-minute clip from the same fight that used video from Britain’s Sky Sports.

So while there were 350,000 pay-per-view buys at $49.95 each, 200,000 watched the best part of the fight, the knockout, for free on YouTube.

The presence of the clips has HBO executives frustrated and upset, especially since the network had a replay scheduled for this past Saturday.

“The thought of people passing around HBO Sports video person-to-person through YouTube is not going to happen,” HBO Sports President Ross Greenburg said the week before the fight. “There is going to be a brick wall set up legally because of copyright issues.”

That defiance and confusion is spreading through the sports world as leagues, networks and other content owners attempt to make sense of YouTube, which in less than 18 months has become the unquestioned buzz magnet of the media industry.

Founded early last year by three, 20-something Silicon Valley tech employees, YouTube is a video-sharing site where clips ranging from the homemade and bizarre to the professionally produced are uploaded for free viewing. The more primitive content forms the bulk of YouTube offerings, but it is the higher-end material that typically draws the most industry and viewer attention.

With a simple, one-click interface that embeds the video software within the Web page, YouTube has sprouted from nothing to a site where more than 100 million video clips are viewed daily, a figure the company contends is more than all of its competitors combined, including Yahoo! and Google.

The site’s traffic has been built almost entirely on viral, word-of-mouth buzz circulated by teenagers and cubicle-dwelling office workers. As a result, many content owners have been caught flat-footed, finding their expensive, highly coveted shows pirated for free viewing.

NBC, after months of seeing top shows such as “Saturday Night Live,” uploaded to YouTube, stopped fighting the tide and now is working with the site to help market its shows, primarily via the distribution of promotional and behind-the-scenes clips.

CBS is positioning itself to follow NBC down that path, but through most of the sports world, the prevailing attitude has instead been to actively search and pull clips from YouTube as a means to protect existing distribution channels.

Among the entities that have removed content from YouTube, or are preparing to do so, are Fox Sports, ESPN, the NFL, Major League Baseball and World Wrestling Entertainment.

“We have a long history of protecting our valuable content across all mediums, including the Internet,” the NFL said in a prepared statement. “We will continue to take appropriate steps to protect our rights.”

The NFL’s stance compared to that of CBS is noteworthy in that the network is one of the key broadcast hubs for the league. Rights to NFL game action, however, revert back to the league immediately after broadcast.

Pali Research analyst Rich Greenfield believes networks and leagues are acting foolishly by pulling their content unilaterally. He believes networks should be doing more to feed sites such as YouTube with higher-quality video and, potentially, include advertising in the clips.

“The last thing you want to do is to pull it,” Greenfield said. “The content’s already out there, whether it’s on YouTube or the 10 other sites that will pop up once you take YouTube down.”

CBS’s ideological switch on YouTube began in February, when it tried to pull a news clip of Jason McElwain, the upstate New York autistic high schooler who vaulted from a team manager role for his varsity basketball team to playing in a game and scoring 20 points in the span of several minutes.

Network officials soon realized the lengths people were going to see the McElwain video.

“Initially, our strategy was to try and stop the clips,” said CBS News and Sports President Sean McManus. “Now, we view it as free marketing for us. In the end, it’s good for us. …We embrace the exposure.”

Other networks, such as OLN, are following that lead by posting their own promotional clips on the site. So far, those uploads aren’t seeing much traffic. One 14-second promo for OLN’s Tour de France coverage drew just 300 views in a week.

Still, unauthorized OLN content is everywhere on the site, including clips from its NHL playoff coverage last month. The network also uploaded clips from its reality show “The Tournament” to the site, which garnered “a couple thousand” views, according to Wendy McCoy, OLN’s vice president of marketing.

“What we put up there, we want the masses to consume and drive interest,” she said. “It’s a viral environment.”

And while HBO Sports was not pleased that highlights of the Mosley-Vargas bout were on the site, they remained up despite the objections — an acknowledgment that a 30-second video clip may not be at the top of the network’s priority list. “It’s a matter of prioritizing different levels of Internet activity,” an HBO spokesman said.

YouTube has been caught off guard as to what it has become. The company still employs fewer than 60 people, and an economic model based on advertising is only beginning to form. Dealing with the press has also become burdensome, as outlets from around the globe continue to seek out the company to tell its story. The company is now turning down most requests, including one from SportsBusiness Journal.

Instead, co-founder and chief executive Chad Hurley, who started YouTube with Steve Chen and Jawed Karim, and the rest of the company are spending their time working on more partnerships to follow the NBC deal and seeking out additional venture capital funding. YouTube has survived to date on credit card debt and then $11.5 million in funding from Sequoia Capital. Hurley, however, was among those in high demand by media executives earlier this month at investment banker Allen & Co.’s industry summit in Idaho.

Aiding YouTube’s upward march is a pro-content owner stance in which the company is not challenging the assertion of copyrights and is attempting to limit clips to 10 minutes to prevent the upload of entire movies, games and TV episodes. YouTube, however, operates with something of a bull’s-eye on its chest: It is far more efficient for the properties to assert their rights through YouTube than to go after the fans who are uploading the protected content.

“We have to go in every now and then and [pull content from YouTube], but they’ve been respectful,” said Bob Bowman, MLB Advanced Media chief executive. “We’re certainly going to protect our brand and our rights, but really, we think it’s in their best interest, too. They want the best user experience for their people.”

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