Microsoft To Scale Back Its YouTube-Rival Soapbox

imageTwo years after making a strategic decision to launch a user-generated video upload service of its own rather than buy another site, Microsoft (NSDQ: MSFT) is pulling back from the market. Microsoft Corporate Vice President Erik Jorgensen tells CNET that the company is rethinking the strategy around the service it launched — Soapbox. Rather than continue to offer a wide selection of uploaded videos, Microsoft wants to create a “forum where bloggers and citizen journalists can post videos relevant to areas in which MSN focuses, categories like entertainment, lifestyle and finance” — if it keeps the service up at all. Jorgensen says, “We haven’t decided whether you just continue to support it or whether it is too expensive and out of our focus to do.” A spokeswoman said that Microsoft did not have anything to add to Jorgensen’s remarks (We have an interview scheduled with Jorgensen Wednesday and will update if we learn more).

Microsoft was reportedly in the hunt for YouTube several years ago but when Google (NSDQ: GOOG) ended up purchasing the site in October 2006, Microsoft put out a statement saying that while it had “evaluated acquiring this type of technology several months ago” it had decided that building its own video-sharing service would be “a more cost-effective way to compete in this new space.” It certainly has been more cost-effective, considering that in addition to the $1.65 billion Google spent to buy YouTube, the site is reportedly on track to lose nearly $500 million this year. However, Soapbox has never been a hit for Microsoft. comScore (NSDQ: SCOR), for instance, said that Microsoft sites had 1.7 percent of the total market for online video in April, while Google had 40.7 percent (mostly from YouTube). And looking at both services today, it’s easy to see how Microsoft may have been a little discouraged with the current state of its site. Only 22 videos were uploaded there over the last hour.