Blog Post

You Tube vs Yahoo

Earlier this week, Yahoo announced a revamped video hosting service. Many saw it as a threat to You Tube (which has issues of its own.) In reality, Yahoo! has its work cut out. I checked with folks over at Hitwise, a traffic analysis and research firm, and they sent me data which shows that You Tube is miles ahead of their competition, including Yahoo! Video.

For instance, YouTube’s market share of Internet visits has increased 110% over the past three months (week ending May 27 versus week ending March 4, 2006). Yahoo! Video has increased its market share of visits 22% for that same time period. You Tube usage metrics are ahead of Yahoo. For April 2006, YouTube’s average session time for that month was 15 minutes 33 seconds. Yahoo! Video’s average session time was 15 minutes 13 seconds.

In April 2005, Yahoo! Video’s average session time was 10 minutes 29 seconds and YouTube was not up yet. And just for kicks, for the week ending May 27, 2006, YouTube was the #43 ranked website among all websites, while Yahoo! Video was ranked #205 among all websites.

32 Responses to “You Tube vs Yahoo”

  1. I needed to get a couple things straightened out.
    SmokeyC4 left Youtube and did a few videos out on the net to promote my new site opening Febuary 23rd to compete against myspace.

    SmokeyC4 did not leave Youtube permanitly and thats why I kept Youtube on my old site.

    Youtube & SmokeyC4 may have had a disagreement but that had nothing to do with the great relationship that SmokeyC4 has with Youtube and continues to have.

    I speak no bad words about any other competing site but im still a Director at Youtube and thats where my loyalty stands.

    Youtube is the #1 personal video site in the world and with the power of Google now owning youtube things will get even better.

    SmokeyC4 is writing my columns at Googles Bloggers or blogspot and will continue to stand by Youtube and Google.

    Thank You…Coyote Lee aka SmokeyC4

  2. As a director at YouTube I can assure you that this website is going to the top and ill advertise it everywhere I go.

    I think it need some new people and new ideas to bring it to the number 1 but I love YouTube and dedicate fully to helping in anyway I can.

                 Thank You Im Columnist SmokeyC4 aka Coyote Lee
  3. I think all the pervious comments that are made are all stupid but i will have to go toward you tube to win outwrite the quality of the movies are so much better and ou are able to look for more videos than yahoo

  4. Sweller

    Everyone seems fixated on the idea of YT turning a profit, monetizing, etc. Why is it incumbent on YT to monetize, while Yahoo & Google’s video attempts seem to get a free pass when people debate revenue generation?

    YT is not some bunch of kids over a garage. These are smart folks…and anyone that wants to compete in this space has the same fundamental issues of how to monetize & create revenue from user generated video sharing.

    YT, Google, Yahoo, and all of the other video also-rans are in the same boat. Part of the issue is that traditional, advertising-based models just have not caught up with this brave new world of widespread use of video on net. It may take a while, but YT’s market share is going no place but up.

    The 29-year-old CEO of YouTube has a damn nice problem: his site, in a single year, has become the premier brand for net based videos. Just because the MBA’s haven’t yet figured out how to hang a dollar number on the brand doesn’t make it any less valuable! This entire space is in it’s infancy – it’s like watching the birth of a new network – and I just don’t buy that YT is running out of money or shutting down their servers any time soon. There are no end of investors, and there’s no credible replacement that’s suddenly going to rise up and drive them out of business.

    Let’s say YT does go the “embedded video ad” route. Does anyone really think that the average YT user is going to boycott the site in protest? Where would they go? And wouldn’t any other site have the exact same dilemma? Yes, it costs money to stream video. Yes, YT is currently covering some overhead with VC investment. But the #43 ranked web site with an average session time over 15 minutes has the great luxury of deciding how, and when, to start monetizing this traffic. If the last year is any guide, whatever YT does, the big corporates will quickly follow suit (but not as well, and not as profitably!)

  5. In the short-term, YouTube is likely going to trounce everyone. But eventually, their cash reserves will run dry, and I honestly don’t have much faith in their ability to turn a profit or even come close to getting sufficient cash flow to prevent the company from tanking. Long-term, my money’s on Google winning.

  6. I’d rather watch a short 15 second commercial than pay… That’s why I believe it should always be an option. If it comes down to having to enter in a credit card number to watch a video, forget it.

    It’s just not looking good for YouTube IMO… I still predict that YouTube will end up down the tube in the next 18-24 months. All of these other sites with alot of traffic are now coming up with their own service… And YouTube hasn’t innovated any.

    What gives them the advantage? It doesn’t matter where the video comes from, just as long as it’s on the net.

  7. Erik Schwartz

    The threat to YT from Y! Video (and goog) is that Y! Video doesn’t need to be specifically accretive to Y!’s bottom line as long as the video service on the whole increases usage and revenue across the network as a whole.

    YT doesn’t have that luxury. They either need to get to cash flow positive, get sold (probably NOT to yhoo or goog), or keep raising cash at higher and higher valuations.

  8. It’s always been an issue even in the “phase 1” launch of web businesses, in terms of when and how to monetise an offering. If they add the commercial aspect now then it gives the chance of a competitor to take away their customers, as posted by Alex Rowland above. If they don’t, then they are in danger of running out of cash or annoying their investors!

    A three-fold strategy might be appropriate:
    1 – raise enough cash to “sit out” the inevitable launch of new players in the market
    2 – keep all the main elements free and continue to build the user base as quickly as possible, and retain them
    3 – work out how to add a “premium” service to the offering so that people could opt to pay a small monthly fee for enhanced features. Flickr did this.

  9. It’s not a matter of people whining about the ads, they’ll just go somewhere else where the ads don’t appear. If YouTube bookends their videos with ads, the party will be over. They know that better than anybody.

    Would you pay $0.01 for access to any YouTube video? Is 15 seconds of your attention worth less than $0.01?

  10. One potential business model would be to show a brief “commercial” at the beginning of each video… I’m not talking a 30 second commercial, but something short and sweet. Since most of YouTube’s videos are viewed from third parties (i.e. embedded in blogs), it would be hard to make a killing from just banners and text links.

    Since there ARE quite a few people who use the service almost as a second television, they could pay a low monthly fee to get rid of the ads.

    I’m sure people will whine about it, but you have to make money some how… Just because you have a ton of traffic doesn’t mean you’ll have a winning business. Hell, I could get alot of traffic by giving away $5.00 to every visitor, but that doesn’t mean I’m a winner.

  11. YouTube is not going to run out of money. They have become a cultural phenomenon with enormous month over month traffic growth. If YouTube went out to raise cash right now, they could raise a $100M round and be oversubscribed. Now, this is not to say that they are going to have an easy time monetizing their traffic. YouTube is going to be stuck with banners and AdSense unless they evolve their business model. I don’t think that these sources of revenue provide the kind of margins that YouTube should be capable of achieving.

    Yahoo’s model of indexing across different publishers is ultimately a better strategy than YouTube’s. But it will take many months (if not years) for this strategy to pay dividends. Other publishing mechanism are rising, and most importantly, mechanisms like Brightcove, NarrowStep and others that provide mid-market video are going to become increasingly important (not to mention broadcast). Within YouTube’s existing model, there is no opportunity to include these sources. Nobody is going to become the central repository of all video. That’s not the way the Internet works; that’s the AOL model and I think everyone knows how that works out.

    I think the biggest problem is YouTube has shown little innovation over the past 12 months (other than some basic interface tweaking). I think they’ve been so busy trying to handle the load that making substantive improvements to the service have been difficult. It’s the classic problem of growing so fast. When you grow that fast most of your time is spent just managing the growth, not driving new growth.

    Yahoo has some fundamental problems with the way they’ve managed channels and some of the other social aspects of the site. Because they’re Yahoo, people won’t give them much of a break. But as far as I can see, they are the first service to make a good effort at searching across multiple video sources. It’s not perfect, but watch the advantage this generates as the quantity of video sources explodes. Yahoo’s real innovation is simple search across multiple publishing systems. YouTube has little to worry about today, but unless they start innovating again and realize they can be outflanked by better execution of the Yahoo strategy, they will have something to worry about in the near future.

    But again, access to cash certainly isn’t one of them…

  12. @Robert Dewey

    I think that’s what people were saying for a lot of start-ups. And they were probably right in 95% of the cases. YouTube, however, looks like a runaway hit to me.

    The big guys play the imitation game because it makes business sense. There’s a chance that they get it totally wrong and their money is good as gone but more often then not, they manage to “secure” a number two or three position.

  13. YouTube did a great job creating easy ways for their users to upload, view, and virally share & distribute videos. while some of their best practices might not be complicated for others (like Y & G) to duplicate, YT did a pretty darn good job right out of the gate and innovated quickly on making them better.

    i think Yahoo will be copying a lot of YouTube features, however i’m guessing YouTube will continue to innovate and stay ahead of both Yahoo & Google. And as big companies (even nimble ones), i sincerely doubt Yahoo or Google will be able to match the pace of iteration / innovation the YouTube folks appear to be executing.

    of course i’m biased since i used to work with those folks, but i also know they have their sh*t together from years of running fast at PayPal & having to respond quickly to eBay and other competitors (not to mention fraudsters). PayPal was a great incubation environment for a bunch of smart engineers to hone their skillz in architecting great internet services & incrementally making them better.

    Yahoo & Google are certainly not slouches, but if i’m a betting man my money’s on YT.

  14. Michael Katcher

    Can we please not say YouTube has “higher usage metrics” when there is a 2% difference! Let’s at least be intellectually honest and say “slightly higher” or “marginally higher” or something to that effect. I can’t imagine 2% is any kind of appreciable difference.

  15. I think that YouTube has a strong position and a compelling viewing experience that will not be matched in the near term. It will be interesting to see their revenue model moving forward, as they are spending millions on bandwidth as we speak.

    I do not believe that Yahoo, or Google for that matter, will match YouTube – at least in the short term. They are known as search engines with supporting video portals. YouTube IS a video portal specifically, which gives it the edge.

    I think YouTube should be leery of other video communities that are coming on strong such as MetaCafe, Bolt, and These tight communities have the ability to eat away at YouTube’s market share stranglehold.

    YouTube needs to continue innovating and improving the viewing experience for the user. On a positive note, the reason YouTube traffic continues to soar is that there are so many videos on the site, that at any given time a user KNOWS that they can find what they are looking for. This ‘critical mass’ characteristic will only grow stronger over time, as will YouTube’s popularity.