Mark Cuban loves to beat up on YouTube. The main focus of his argument is that YouTube is a modern day Napster, steeped in the dark art of copyright infringement and ready to die a painful litigious death. But Mark has it very very wrong. Doubt about the extent of YouTube’s liabilities will certainly depress the price an acquirer is willing to pay, but it certainly isn’t the company’s death knell.
YouTube hosts and streams copyrighted content. No argument. But unlike the Napster days in which there was no evidence that this type of large scale ‘piracy’ actually helped distribution, today the signs are everywhere. Even the marketing departments of most major studios understand this when they upload their own copyrighted material to the site. But YouTube is, in its essence, a massive syndication platform for content. YouTube is not about monetizing this content directly; it’s about getting tons of people to watch a video clip at the lowest cost possible.
This type of massive low-cost syndication of low-quality streamed content is less than a year away from becoming the de facto launch strategy of professional and amateur content alike. While the lawyers may not understand this yet, the marketing guys certainly do. When content owners begin taking down copyrighted materials from YouTube, they become less culturally relevant. Has Jon Stewart’s relevance and consequent profitability to the studio declined as a result of his frequent free appearances on YouTube?
While I don’t have a great deal of confidence in the intelligence of the studio system, the positive impact YouTube is having on the distribution and relevance of quality television programming is soon going to become incontrovertible. Recent deals with Warner are the first indications of this effect. YouTube is quickly being woven into the fabric of a new video marketing and distribution model. The tearing of quilt is not in anyone’s interests, least of all the studios. This is simply about negotiating leverage in the fight over in-stream and localized ads (which I would argue will be minor compared to other revenue sources, but hey, they don’t know that yet.)
I didn’t write about YouTube’s compliance with DMCA rules (which it is almost certainly adhering to as rigorously as possible) because it’s almost irrelevant. This is all about money and value creation and who’s going to capture what kind of value when YouTube starts making real money (if ever). YouTube is where cultural memes are born and raised. And that, Mark, is a very valuable place to sit.