UPDATED 11:38 EDT / SEPTEMBER 13 2010

YouTube’s Live Video Operation Won’t Be UGC

image I’ve seen a lot of mentions of the news this morning that Google has stepped into live streaming, but very little analysis as to what it means, both in terms of the rest of this nascent industry as well as to the company itself.

I weighed in very briefly early this morning when our own Kristina Farrah pinged me on the topic when she did her write up. Here’s what I told her:

“This is something we all expected YouTube to do for quite some time. Just recently, they acquired live-streaming technology in the purchase of Episodic, a live and on demand streaming provider. This move validates the space that competitors like Justin.TV and Ustream have been operating in for years, but poses a much larger problem for YouTube: monetization. The problem YouTube has had monetizing it’s on demand content will be completely overshadowed by the problem they’ll have when they allow everyone in the world to create a live stream as well.”

It’s important to note that we’re just plain not sure what this means for the future of YouTube and live, and that sort of uncertainty is exactly what must be making the other players in this industry nervous at the moment.

They’ll all certainly put a brave face on it, if asked. I didn’t even bother hitting up my friend and Ustream founder Brad Hunstable for a quote this morning, because privately and publicly, he’s always said the same thing about the proposition of a YouTube, live edition: “It validates the space.”

Validation isn’t the only thing it brings to the space – in the same way the YouTube juggernaut rolled over nearly every other player in the user-generated content (UGC) video field (at least in English-speaking markets), a live version of YouTube has the potential to do exactly the same, assuming they’re making a UGC play.

I think, though, if we could try to divine any clues from today’s very clue-free announcement, it’s that YouTube may not be making a UGC play here.

3 Reasons Why YouTube Live Won’t Be a UGC Play

1) First and foremost, the problems with YouTube going live begin and end with finance.

There was a lightly circulated analyst report that came out a few weeks ago talking about how YouTube is, once again, “almost profitable.” YouTube has been on a self-described “close-to-profitable” status for many years now, and whether or not YouTube specifically, and UGC in general, can ever be a profitable venture has always been one of the perennial debates in the social media and Web 2.0 circles.

YouTube users create 24 hours of video every minute, but as Andy Plesser reports at Beet.TV, Justin.TV users create over 32 hours of programming every minute, and Justin.TV is a site with an obviously much smaller footprint than YouTube.

I think that the debate has been settled on whether or not UGC is a profitable venture (it is, when done correctly), as is the debate on video being a profitable venture (it’s highly profitable – why do you think we’re doing so much of it now at SiliconANGLE?).

YouTube, though, hasn’t opened the kimono yet to show us all how highly lucrative it is. Part of that is due to the cost of storage and bandwidth for hosting the world’s largest repository of videoed nutshots, but part of that is that it’s simply a massive undertaking. The growth of YouTube, to this day, outpaces the speed at which Google can hire sales-people to sell advertising against it.

Trust me, knowing what I know about how these live-video startups were formed, it would be trivially easy for YouTube and Google to allot a million or two dollars a year at operationalizing live video under the banner of YouTube, but keeping up with the demand for such a service on a global level would be staggeringly large on the infrastructure side – and the industry hasn’t come up with any large-scale viable alternatives for monetization aside from Google Adwords.

2) Episodic was recently acquired, as we noted here, with live video distribution assets.

I was one of the first five registered users on Episodic’s service (if you believe the UID number associated with my account, that is). Unfortunately, I never got a chance to beta test their live video services. I haven’t actually seen a version of Episodic’s live video service out in the wild, either, so I can’t tell you a whole lot about it that I didn’t learn from reading the API documentation.

That said, when Episodic was acquired by Google a few months ago, the only unique asset that Episodic owned (aside from the talent at the company) was the live video component. Certainly, Google had access to some live video capabilities, but it very obviously heavily banked on third party IP and resources to anyone who bothered to click “view source.”

When you look at the model that Episodic banked on and the level of detail that’s present in their content management system (CMS), it’s obvious to online video veterans that there’s very little chance any of that could be deployed to a general-public facing CMS. There’s just too much level of detail and customization available to the users.

What’s more, Episodic never created a public-facing portal for distribution of user content.  All distribution that happens on an Episodic-hosted video happens because the author promoted it. There’s no “stumbling” upon an Episodic video for this reason, and there’s no reason to assume that their live-streaming solution would be any different.

3) The Cast of Characters Featured at the Beta Launch were All Semi-Pro Veterans.

If you go down the list of producers disclosed at launch of YouTube Live, they were all names you probably recognize if much of your video consumption takes place online: Howcast, Next New Networks, Rocketboom and Young Hollywood.

This list smacks of amateur-turned-pro.  All of these shows are New Media darlings with great success stories, and almost all of them share one thing in common: they’re most decidedly not UGC. They’re produced shows with a semi-consistent format that arguably present the best of what New Media has to offer today.

In the YouTube Live announcement, the call to action wasn’t to “broadcast yourself live,” but to watch other producers do live versions of their productions. In this, the message between the lines is that YouTube Live will be either invitation or application only (similar to YouTube’s producer account system).

4) The History of YouTube’s Live Events Points to Highly Produced Programs, not UGC.

The very first live YouTube event was the highly embarrassing 2008 US Presidential Primary debates (which YouTube very conveniently left out of the announcement). They did list a number of other high profile and record-breaking online streaming events hosted at YouTube: U2, Indian Premier League, White House and E3.

All these events do have one thing in common: they were all hand-selected and highly-produced events. There was barely an ounce of UGC content in any of them, marking a dramatic departure from what made YouTube what it is today. I think this, above all else, is exactly the sign-post that will shape the future development of YouTube Live, and why you’re not going to get a bunch of stressed-out worried individuals going into overdrive at the existing players in the live-streaming market.

It’s also going to be the reason that YouTube Live won’t provide a whole lot of validation to the existing market, either. YouTube isn’t validating UGC with this move, they’re validating that the Internet is finally ready for consumption of live streaming video on mass scale.

[Editor’s Note: SiliconANGLE believes in on-demand and live streaming video. Check out SiliconANGLE.TV for our work in the space, powered by Justin.TV. –mrh]


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