Five years ago this past Monday, three former employees of early PayPal — Chad Hurley, Steve Chen and Jawed Karim — founded the ever-pervasive video-sharing platform. The site now boasts over 2 billion views per day or, as YouTube’s blog puts it,

“…nearly double the prime-time audience of all three major U.S. television networks combined.”

Click on this image to see a larger, more readable version of this very informative graphic about YouTube's first five years of existence.

As the story goes,  Hurley and Chen conceived YouTube after having trouble sharing videos shot at a dinner party at Chen’s San Francisco apartment. The mission was simple:

“…give anyone a place to easily upload their videos and share them with the world. Whether you were an aspiring filmmaker, a politician, a proud parent, or someone who just wanted to connect with something bigger, YouTube became the place where you could broadcast yourself.”

Aligned with this mission, YouTube’s celebratory channel prompts users to upload videos and share their YouTube stories, some of which are chosen for the channel’s video wall. Also home to an interactive timeline of some of the most important moments and memes in YouTube history, the channel also hosts big names like Conan O’Brien, Vint Cerf and Katie Couric, who curate playlists that showcase their favorite videos.

YouTube’s Rise: Striking Fear into the Hearts of TV Networks

A few fun facts:

• Users upload over a day’s worth of video to YouTube every minute;
• YouTube broadcasts live sports to over 200 countries;
• and the average user spends about 15 minutes per day on the site.

Needless to say, YouTube’s staggering success is changing the way TV networks are thinking about both their audiences and themselves. As Wired’s Eliot Van Buskirk writes, YouTube’s doubling the viewership of the United States’ three major networks

“…hints at an eventual tipping point when the internet could become the world’s dominant video delivery system, Mark Cuban’s predictions aside.”

YouTube, however, may be more of an ally than a foe for TV networks. As Van Buskirk astutely observes, unlike their counterparts in the music industry, TV networks not only own their content, but they also have the leveraging power of having similar, successful projects already in play — e.g., Hulu (ABC and NBC) and CBS.com. This will certainly work in their favor as they make the plunge of officially posting their old content on YouTube.

More interestingly, Van Buskirk notes, YouTube is changing our viewing behavior, and our computer content viewing habits will inevitably alter how we consume TV programming.  The trend toward bringing the internet to TV is already well in motion:

• YouTube reaches TV-using gamers through Nintendo Wii’s and Sony PlayStation’s ability to connect to the internet;
• set-top boxes like D-Link’s Boxee Box are making it possible to stream high-definition and even 3-D YouTube videos onto a TV;
• and Google will soon unveil its next-gen set-top box in partnership with DishNetwork, Intel and/or Sony.

TV networks aside, I think the real losers in this trend may ultimately be TV manufacturers. Recently, I personally opted to buy a large computer screen instead of a TV, given how little I actually consume TV programming (, which was the case even before YouTube,) and the wide-spread availability of those TV shows I do want to watch online. It’s no wonder, then, that companies like Samsung are running to novel technologies like 3-D to reinvent their businesses.

A New Creative Class: New Media Content Entrepreneurs

As YouTube’s director of strategic partnerships Kevin Yen recently noted in his article on CNet, new media like YouTube are giving rise to a growing creative class. While few in the mainstream know of them, new media’s emerging creative class often command weekly audiences that dwarf network television’s biggest shows on a good night, Yen observes.

For example, Phil DeFranco, who runs the seventh most popular channel on YouTube, “has beaten ‘Larry King Live‘ and ‘The O’Reilly Factor‘ in daily audience,” according to a recent article in Fast Company.

Of this creative class ilk, Yen writes:

“They are not only the actors and stars of their show, but they are the producers, the copy editors, and cinematographers; they work to market themselves, close advertising deals, and sometimes employ a team to support and promote them.”

Online video content companies like Machinima, Next New Networks, and Demand Media collectively represent billions and billions of views, which they have converted into dollars (primarily from advertising). Nascent rental services for YouTube content only supplement an already robust toolkit for online content creators to turn their projects in money-making enterprises.

That said, YouTube undeniably is still home to a plethora of crap. Among that crap is the first YouTube video ever posted, “Me at the zoo” (see below), which features founder Jawed Karim at the San Diego Zoo. The nineteen seconds you’ll spend watching it is probably nineteen seconds too long. Thanks, YouTube, and happy birthday!

Thanks for reading! I hope to read your thoughts and concerns on YouTube, the future of TV networks & manufacturers, and new media’s emerging creative class in the comment section below. If you’d like to contact me directly, you can reach me through my newly added contact form.

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Pricing iPad e-magazines provides new opportunities for publishers to get it right this time.

Subject to ongoing battles over who has rights to what, one thing remains certain to both publishers and Apple–content will cost something, unlike most e-newspaper counterparts.

Certain newspapers, like the Wall Street Journal and the New York Times, have successfully employed partial pay or pay wall (i.e., pay after a reader has visited more than a certain number of times within a given period) models. WSJ.com boasts over a million pay subscribers for its online content. But, a million pay subscribers certainly isn’t the norm for most news content providers, and even WSJ articles can be accessed for free through backdoor sites like Google News (much to the chagrin of Rupert Murdoch).

Pulitzer Prize winner and former Chairman of Dow Jones & Co. (which publishes the WSJ) Peter R. Kann eloquently describes the decline of print newspapers, the emergence of the ‘free model‘ of online content, and the pricing challenge most newspaper publishers face:

“… by the time Internet editions arrived, the prevailing philosophy in most publishing companies already was that customers could not be expected to pay much for content, that it was easier simply to rely on advertising. The new Internet editions were merely the ultimate extension of that trend: free news to the consumer, total reliance on the advertiser.

But that didn’t quite work out as expected. Online advertising, given virtually unlimited supply and also given clever new competitors like search sites, has been nothing like publishers posited. Online edition ad rates and online edition ad revenues are only small fractions of those in traditional print. And as print advertising continues its steady decline, online advertising cannot come close to compensating.

The print editions still have customers willing to pay for at least a discounted subscription, but there are fewer of the customers as free online editions peel them away from print. And so the publishers are left to juggle their twin products—the old one in inexorable decline and the new one in commercial denial—and pray the future may be somehow different.”

Sadly, many print newspapers seem to be going the way of the dodo, drawing cries of death of the medium, at least as we knew it, from many.

Unlike their faster-moving counterparts, books — in all forms — are doing quite well, financially-speaking. According to the Association of American Publishers, book sales increased year-over-year by roughly 4 percent at $11.2bn for the year. Of those, about $170m were e-book sales, marking roughly 177 percent growth over last year. While not insignificant, e-books grabbed only a little over 3 percent of the total book sales.

Beyond the cost of e-readers, some, like PC World’s Tony Bradley, criticize what they perceive to be e-books’ bloated pricing model. Bradley writes,

“Media businesses–whether music, movies, books, magazines, or newspapers–seem to cling to a pricing model that fails to account for the significantly lower overhead of digital distribution. These entities seem hung up on pricing narcissism, rather than realizing that production costs are different and distribution is almost universal–changing the economics entirely from traditional models.”

Bradley suggests a revenue-focused model, which (to me) makes sense:

“Basically, publishers should be pricing digital distribution based on what it would expect in net revenue from the traditional distribution method, not based on some calculated percentage of the traditional retail price. I don’t know the exact numbers, but If Wiley is only going to net eight dollars when it sells a printed version of my book, then it should create a digital pricing scheme that nets the same.”

Some, like BNET's Eric Sherman, predict that the iPad will 'kill publishing.'

Unsurprisingly, many publishers like Murdoch seem more prone to employ beefier pricing models that hinge on how much people are willing to pay. Can you blame them for wanting a bigger margin?

That said, e-magazines provide a whole new opportunity to find a happy pricing medium that pleases both publishers and readers. Needless to say, the removal of frequent, full-glossy print production costs will reduce publishers’ overhead significantly, allowing them to price e-magazines lower than their costly print counterparts. Better content and more innovative design — enabled by the iPad’s functionality — will allow for the creation of quality multimedia experiences that readers/viewers are willing to pay for.

Central to paid e-magazines working is leaving old models behind–from both a production and consumer standpoint.

Content and design worthy of pay

In many ways, the term ‘e-magazine’ is too antiquated to encapsulate the multimedia, dynamic possibilities of content production and distribution through the iPad. It’s a given that video and audio should be integrated among text, but navigation through content should move beyond a page-by-page linear progression.

The navigational structure of each issue could take on unique properties, linking different portions of content to one another and external sources. Typefaces, sizing and layout could vary dependent on the content and what would be most aesthetically gripping to readers/viewers/listeners — much like magazines are now. To do this, however, developers would play an increasingly important role, taking on tasks akin to layout and design editors of magazines–but with more design elements at their disposal. It’s not just a matter of positioning text, pictures and headlines anymore. It’s creating a dynamic, multimedia experience with which readers and viewers can interact and experience with multiple senses.

In other words, publishers need to envision a medium that consumers are willing to pay for. If publishers utilize the technology to its fullest and give readers/viewers great content in a way they have never experienced it, I predict they will not only make good money, but they will also reverse magazines’ downward trend in recent years. Granted, that’s easier said than done. It may be the case that old magazine houses are too entrenched in their old ways to look into the future, and it may take a disruptive innovator in their industry to catalyze forward motion.

Shifting consumer focus: from price to value and cost

Most good sales people will agree that it is key to shift clients’ focus onto value, as opposed to price. A closer examination of  this notion and  re-reading Kann’s article in WSJ casts some light on how this is relevant to publishers’ making money with their content.

Entrepreneur.com’s Barry Farber writes,

“…there are customers worth working with, whom you can help understand the difference between price and cost. Price is what they pay for the product or service; cost is what the investment is over the lifetime of doing business. Can you help your customers grow their business in a way they never thought possible?”

In the case of publications, readers and viewers are in the ‘business’ of personal edification. And if publishers can convince their audiences that they convey quality content in a quality way, the cost of an e-magazine becomes an investment in personal edification.

Looking at the difference between e-books and e-newspapers (and WSJ’s content contrasted with many e-newspapers), the difference is quality. Books take a significantly longer time to write, and readers are thus willing to pay extra for the value of the writer’s labor. The WSJ has unique, quality reporting and a distinct brand, and hence people are willing to pay for the content over free content available on Joe Schmoe’s blog. Admittedly, this is an oversimplification of the issue at stake, and free content isn’t necessarily bad (achem…this blog).

To end, here’s a video demonstration of Wired’s iPad e-magazine, in current form. It’s looking pay-worthy, in my opinion.

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Steve Jobs holding up the iPad, to be released in April 2010.

Rumors that Apple’s highly anticipated iPad will ship with a webcam gives me reason to believe that Steve Jobs’ tablet from on high is, indeed, the must-have item of the next decade.

A webcam not only adds value to the iPad’s functionality, but it also can potentially transform how we communicate with one another, interact with the real world, and convey our identities through social media.

1. As a Portable Video Replacement for the Cell Phone. Imagine a world in which people replace cell phones with iPads. Looking into the face of callers on a 10-inch color screen replaces audio-only communication. Not only that — instead of paying for the minutes and data plan for your smart phone, you only pay one flat fee for unlimited iPad 3g/4g service.

Skype on iPhone - click to Learn more about its limitations.

2. Augmented Reality Viewer. Imagine pointing your iPad at an object and/or place and immediately receiving a wide array of information about the object, which is overlaid on the image. Imagine you’re an anatomy student looking at a cadaver. Now a person in a mall. Now an art lover in a museum. The possibilities are endless.

3. The Ultimate Social Media Device. Imagine a world of mobile video journals, equipped with what is effectively a 10-inch mirror. Narcissistic video bloggers will have an even better tool to give on-the-go, content-rich updates of their thoughts and physical appearance at any given moment. Enabling mobile, video-rich social media updates may also empower a new level of citizen journalism, beyond video snippets and mobile tweeting.

Assuming both strong networks to support iPad and that Apple will leave these features unlocked — admittedly “ifs” — these features (enabled by another big “if,” the webcam) can alter the communications landscape even more so, I think, than the reader features will immediately affect the old media landscape.

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