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MARKETING MANAGEMENT

SUMMARY YOU TUBE: TIME TO CHARGE USERS?


Pengajar: Ike Janita Dewi, SE., MBA.,Ph.D.

Oleh: Oleh: Ahmad Ardiansyah Araro Jireh Galing Priyatna Angkatan 33 Eksekutif A

MASTER OF MANAGEMENT PROGRAM FACULTY OF ECONOMICS AND BUSINESS GADJAH MADA UNIVERSITY JAKARTA 2013

In January 2010, YouTube, the world's largest online video aggregator, was still seeking to become profitable. Was the time right for Google, YouTube's parent company, to charge users seeking to upload content, as some analysts had suggestedand if so, who should be charged how much and for what? Could YouTube charge users for downloading content, a model it was now beginning to test? Or would it be better for the online video giant to continue to pursue an advertising model, but perhaps broaden its services to advertisers? Describes the online video market as of 2010 as well as YouTube's offerings to users, content owners, and advertisers. Provides information on the site's revenues and costs. Also contains detailed data on online video users and usage behavior. (http://www.hbs.edu) The Market for Online Video The online video market witnessed an explosive growth :

The explosive growth of online videos was fueled by several factors : - Increasing broadband penetration Availability of high-speed internet

Rapid advancement in technology improved the quality of videos Significantly enhanced the user experiences Increased ease with which videos could be uploaded created a wave of user-generated content

YouTube was by far biggest online video site with over 129 million unique U.S. viewers who watched more than 12 billion videos. There had been two others significant recent developments in the market for online video, Hulu, was launched on March 2008 as a joint of NBC Universal, News Corp. and Disney. Other one is Comsat and Time Warner announced new service TV Everywhere, that would enable cable, satellite or telecom subscribers to view premium content free. YouTube YouTube is a video-sharing website, created by three former PayPal employees in February 2005, on which users can upload, view and share videos. The company is based in San Bruno, California, and uses Adobe Flash Video and HTML5 technology to display a wide variety of user-generated video content, including movie clips, TV clips, and music videos, as well as amateur content such as video blogging, short original videos, and educational videos. YouTube was founded by Chad Hurley, Steve Chen, and Jawed Karim, who were all early employees of PayPal. Hurley had studied design at Indiana University of Pennsylvania, while Chen and Karim studied computer science together at the University of Illinois at Urbana-Champaign. According to a story that has often been repeated in the media, Hurley and Chen developed the idea for YouTube during the early months of 2005, after they had experienced difficulty sharing videos that had been shot at a dinner party at Chen's apartment in San Francisco. Karim did not attend the party and denied that it had occurred, while Chen commented that the idea that YouTube was founded after a dinner party "was probably very strengthened by marketing ideas around creating a story that was very digestible". YouTube began as a venture-funded technology startup, primarily from a $11.5 million investment by Sequoia Capital between November 2005 and April 2006. YouTube's early headquarters were situated above a pizzeria and Japanese restaurant in San Mateo, California.[10] The domain name www.youtube.com was activated on February 14, 2005, and the website was developed over the subsequent months. In less than a year, YouTube was streaming more than 100 million clips per day. The San Fransisco Chronicle reported that, YouTube

has helped transform the Web, spurring millions of people to tune in to watch popular television shows, music videos, teenage confessionals, grainy footage of stunts and pranks, and home videos of shildren and pets.

In spite of its success, YouTube also faced considerable struggles, garnered the ire of media companies for failing to ensure that its videos respected the copyright laws (Giant Viacom Claim). YouTube subsequently introduced a Content ID system which checked uploaded content against a database of copyrighted videos. You Tubes Customers 1. Users User Profile:

2. Content Owners - User generated Two challenges: copyrighted material uploaded by users created conflict with established media companies, and advertisers considered amateur content risky and often unfit for advertising. - Media Companies They offered premium videos on the site through You Tube channels. - Vevo The partnership gave Vevo the right to host the large majority of You Tubes music videos and manage advertising sales for that content. 3. Advertisers Company could advertise on You Tubes homepage, on side panels or on subsequent pages, or through in-video advertisements. Advertisers also had the option to create their own brand channel on the site to engage their customers and built their brands. You Tube Profitability Below is speculation from financial analyst about revenue, costs and overall profitability of You Tube:

How to monetize YouTube? Google are optimistic about the YouTubes potential. They really placed with trajectory and revenue growth of YouTube. Google should make a decision about YouTube, keep the statues-quo and continue to support, grow and increase the number of streams via advertising to break even. In May 14 2009, the Time magazine was called YouTube as the one of the 10 biggest tight failures of the last decades, only three years after it held YouTube the invention of the year. Option 1: Charge User For Uploading Videos It May the most controversial of the many ideas suggested by industries insiders is to charge users for uploading videos there by helping them to shoulder the costs associated with YouTubes assortment. Google could monetize the video through advertising and YouTube could charge users for videos that exceeded certain length or space their holds there was a multitude of possibilities. Option 2: Charge Users For Downloading Videos Or For Other Services By Charging users when downloading videos for each transaction separately (music and videos are sold through iTunes) or on subscriptions basis. Which users should be charged, for which content, through what kind payment model? Option 3: Continue To Rely on Advertisers By charging user and to continue to run YouTube solely as an advertising-supported site. Given the imprecision profits, YouTube would likely have to rating its offering to advertiser. Regarding Vevo a world wild way to reduce contain acquisition costs and increase advertizing revenues, and called it be replicated in other

settings? What would be the best way to engage advertiser? And how can YouTube its strange to its advertise in this respect?