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YouTube’s Fast Followers

While I don’t really create or consume much online video, especially of the user-generated sort, it’s tough to deny that the market is growing very quickly. YouTube has really been the company at the center of all of the popular discussion about the potential for this medium.

However, the landscape is changing for YouTube. Almost every major web property has announced (or actually released) a video sharing/uploading service that offers some mix of UGC and premium content. If you add in other upstarts like Photobucket, you have a pretty crowded market.

Will the “fast followers” catch up? YouTube has put out a pretty good playbook for how to build a successful site in this space. Copying every element of that website is easier said than done, but most of the major web properties seem to be doing a pretty good job of achieving feature parity with YouTube. Very soon I would expect that most of the major offerings will have a very similar feature set.

So, if the majors can catch up to YouTube, does that mean that they will overtake the company’s lead? I have no idea. Part of what makes YouTube so special is that it is the place that people think of when they think of user-generated video content. That won’t change overnight. However, the counterbalancing force seems to be that users are not weded to any one service — people seem perfectly willing to post video in multiple places as long as the uploading process is easy. And, as evidenced by the fast growth of almost every offering on the market, there is a lot of pent-up demand looking for outlets.

One more point. Video sharing, in my opinion, does not have the same characteristics as something like Facebook. It would be really hard to recreate Facebook because content creation happens in their actual interface. Unless you developed some massive profile exporter, getting people to recreate that content would be hard to do. In the world of video, content creation does not happen on YouTube, Google, or wherever — that process takes place offline and the choice of where to post it is secondary.

What will this mean for other similarly-situated companies? I think that this will be a really interesting moment in the history of web 2.0. If Google, Yahoo, etc can make a meaningful dent in this market and capture some real market share, I think it will really challenge the notion that early movers who build up large communities of users are per se unassailable. The logical next step, in my opinion, is that it will cause people to rethink the prospects for a lot of startups who are building interesting communities but who are ripe for copycat behavior.

Conversely, if the attempt by Yahoo!, Google, and others to replicate functionality offered by YouTube today is a failure, it could really break things wide open for startups. Make no mistake — the battle for dominance in this space is a pitched battle and the stakes are very high. If a startup can fend off the best shots from these larger companies, there is really no limit to how far YouTube can go.

The money question. The other interesting factor in this equation is money. I have heard varying reports about the amount of money that YouTube is spending on bandwidth. I have also heard varying numbers on the amount of revenue they are currently generating. The business model question probably isn’t valid at the moment — as long as they are a fast-growing market leader they should be able to continue to tap the VC market to fuel their growth. However, if their leadership position becomes more tenuous, the lack of strong monetization and the bandwidth costs could really put a hammer on the company’s prospects.

Just some random thoughts. As always, you can email me instead of leaving a comment.

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