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June 18, 2008

Cuban YouTube prediction

Mark_cuban_2_03_2  If you didn't see Mark Cuban's post Tuesday morning, you missed his declaration of victory. In his post titled "Hulu is kicking Youtube's Ass" he claimed that his prediction for the demise of YouTube is coming true.

Cuban's main assertion is that Hulu is "kicking ass" because it is generated revenue from videos. Mainly Hulu is beating YouTube in terms of revenue per video and revenue per user. Cuban has made billions of dollars by making the right decisions and through some pretty clever financial insight. I just sold my 1996 Camry and don't like spending more than $7 for lunch. However, I think there is a flaw in his argument. He's missing, or maybe ignoring one big difference between the two sites, TRAFFIC:

Hulu doesn't even come close to the number of visitors that YouTube receives. At the end of the day, when banner and search ads are served, the number of impressions count. Sure, it's not just about impressions but traffic to a site will always be a component of how much they can charge for  advertising.

Beyond traffic, YouTube does have the ability to target videos based on categories of interest. Ads can be and are served up based on what type of content people are viewing. With YouTube a part of Google, you have to believe that this will do nothing but improve considerably.

There's another flaw in Cuban's argument. He believes that people go to YouTube to see content that is copyrighted. I believe this is partially true, however, not the whole story. Sure, people would rather see a clip of their favorite TV show rather than my crazy pet tricks. However, I believe that people go to YouTube not just to see these clips but to see the video AND participate in the conversation, see how people have manipulated them, basically to be part of the community. YouTube is more about an social network, Hulu is TV on the web.

Mr. Cuban, the jury is still out.

- Paul Herring

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Comments

Interesting, Mark has been pretty good at identifying the next big hit...time will be the answer to this one, but one thing to put into thought is the landscape. The demographic is different, and if you check out http://www.time.com/time/specials/2007/article/0,28804,1809858_1809957,00.html

you will see no mention of YouTube...but Hulu is there.

check out: http://www.cubanandthecubs.com

I think Cuban's prediction is par at best. Even he'll admit this:
http://www.blogmaverick.com/2006/09/25/some-predictions-come-true-some-dont/

The demographics are certainly different but I think what's more important is that the reason people come to the sites is different as well. One is about commmunity, expression, interaction and one is about seeing TV or movies online.

I for one, think they'll both survive but that YouTube will always dominate in terms of visitors.

Maybe he should also read this...

http://newteevee.com/2008/06/19/citi-youtube-has-revenue-potential-of-491m/

Maybe the answer is that they're trying to use less intrusive advertising models, which of course, will cause a longer ramp up time.

@Paul McEnany -- Good point, so basically YouTube COULD be generating more revenue but they're putting off short term revenue for long term engagement of their customers and larger revenues in the future.

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