Thanks to Ian Schafer the CEO of Deep Focus, the web got a rundown on YouTube's Videocracy event in New York last night. The audience was apparently mostly marketing/advertising folks and the message was geared toward them, but there were a few product developments mentioned that suggest YouTube is about to go through the same identity crisis that the early players in the digital music transition went through.
The new features announced amount to early steps in the "socialization" of YouTube's distribution hegemony. I could be making the wrong analogy, but if it is anything like music, the essential strategic logic is that now that we appear to be on the road to lock-in on distribution/audience share, what value can we add on top of that to increase margins. This is coupled with trying to curb the low level of engagement (time spent per session, for instance). This line of thinking almost always results in some form of "power to the people" tactics for promoting content. To wit in YouTube's case:
- What YouTube tries to differentiate by calling it "active sharing" but is actually yet another implementation of the status functionality made popular by Facebook
- Collaborative filtering (again)
- Simple audience management tools as a preface to asking (soon begging) content creators to make YouTube their publishing homepage (i.e. don't buy your own URL and identity)
- ubiquity, meaning publish once watch anywhere
This is the most reasonable direction for YouTube to go, considering their options, but as the title of the event makes clear, it is really an attempt to claim the mantle of an idea (video democracy) which, and this is my key point, they are intrinsically against.
Full democratization of a space/industry should include a choice of distribution options. YouTube's conceit over the next year will be: anybody can participate, everybody has opportunity, and the vox populi will be heard, choices are limitless...as long as we all to choose to put our very colorfully differentiated eggs in YouTube's distribution basket. I repeat, this is a reasonable claim for YouTube to make and I'll add a reasonable bargain for the creator community to take, but with one important caveat: that there remains no other option.
What YouTube will (should, must) try to do in the video marketplace is exactly analogous what Amazon has tried to do with Marketplace, Fulfillment by Amazon, Advantage, etc. Amazon attempted to leverage their retail hegemony to co-opt the independence of smaller sellers. Likewise, YouTube is leveraging its distribution hegemony to co-opt the independence of smaller publishers. However, Amazon is not the company synonymous with the democratic marketplace. eBay is.
eBay was founded a year after Amazon, and while it wasn't exactly conceived along this line of thought, it does represent the best answer to the question: what would a place to buy things look like if you even democratized the sales/distribution chain? There would be no hegemonic warehouse, no single shipment provider, no single payment method (to wit, eBay's failed attempt to push BillPay). eBay, was originally thought of just as an auction company, then a marketplace, but in the context of this discussion I'd like to propose they are, in fact, a transaction information organization company.
One obvious criticism to this analogy that I'd like to put to rest quickly is that we shouldn't compare a retail space to an ad supported one. That criticism is just currency semantics. While consumers don't spend dollars at YouTube, they do spend time. In fact, this provides an opportunity to deepen the analogy. Just as it is in Amazon's interest that you spend your dollars at their site on items where they have the highest margin (lowest cost). It is in YouTube's interest that you spend your time at their site in a way that taxes their resources least (either watching video that someone else is paying to distribute/promote, or click around not watching video at all). eBay on the other hand, and this is a restatement of my key point doesn't need to care about any of this...they care about the total number of transactions.
One last point, before I get to the conclusion you can guess is coming. There is no strong evidence that one of these paths trumps the other. eBay's market cap is currently ~15% higher than Amazon's, but I'm sure the opposite was true at some point. Regardless both are worth over $30 billion Both continue to suffer from constant pressure on their core businesses and the need to expand into other areas to justify the valuation (Skype, Kindle). Both companies have made missteps trying to adopt the other's intrinsic natures (zShops, BillPay).
And now the proclamation you've all been waiting for. It's time for an eBay of the video space and ffwd is committed to building it. A democratic video information organization company that doesn't care which distribution platform you use and whose goal is to maximize the use of a viewer's time (currency)? Call us crazy, but we won't stop until we've either produced a worthy counterpart to hegemony, or flame out trying.
