Google-owned YouTube hasn’t had a serious competitor for years. But Yahoo would like to try: The Web giant has been working on a plan to lure some of YouTube’s most popular stars and networks to show their stuff on the site, according to several sources close to the situation.
The strategy in the works — which Yahoo hopes to launch in the next few months — is aimed at taking advantage of persistent complaints by both video creators and owners, who think that they don’t make enough money on YouTube.
Yahoo CEO Marissa Mayer has been mulling how to have a much bigger presence in Web video. Under her leadership, the company tried and failed to buy France’s DailyMotion and has been pushing a number of other high-profile media initiatives, such as adding television news star Katie Couric to its site.
But creating an online video service is a much bigger deal and is not just conceptual — several industry sources say Yahoo has recently been approaching individual YouTube stars and some of the big networks now on the giant online video service.
The come-on? Yahoo executives have told video makers and owners that the company can offer them better economics than they’re getting on YouTube, either by improving the ad revenue or by offering guaranteed ad rates for their videos.
In addition, Yahoo has offered extensive marketing, even on its home page, as well as allowing video producers the ability to sell advertising along with Yahoo’s sales force.
“Yahoo Screen was part one,” said one producer who has agreed to be part of Yahoo’s video effort, about its current offerings. “Now, this is part two.”
For now, at least, Yahoo isn’t talking about replicating YouTube’s open platform, which lets users upload 100 hours of content every minute to the site. Instead, it is interested in cherry-picking particularly popular, more professional YouTube fare.
Yahoo has also told some video owners that it can use its well-trafficked home page and other high-profile real estate to promote their clips on a non-exclusive basis.
After a year, one source inside Yahoo said, it might open the platform up further. One source inside the company said that Yahoo is prepping a new content management system for the effort, although some have suggested it could also buy an existing service like Vimeo.
Mayer — a former Google exec who has imposed an awful lot of Googley ideas on Yahoo since she got there (imitation is the sincerest form of flattery, ya know!) — has been pushing the effort. It is all part of her valiant and doubtlessly exhausting attempts to turn around the Silicon Valley Internet giant. So far, other than the spectacular run of its Chinese asset, Alibaba Group, that has boosted Yahoo stock, the core business continues to lag. That giant sum of money from Alibaba could easily pay the costs of mounting a challenge to Google, which some might think a fool’s errand.
But Yahoo needs to show it can grow. Sources inside the company said the first quarter — which ends right about now — was also lackluster, even as investors have been watching for signs that Mayer can turbocharge the business after two years in the job. Video is obviously an explosive area and an arena in which Yahoo can perhaps offer a credible alternative.
All of what it seems to be offering certainly runs counter to what’s available at YouTube, which takes a 45 percent cut of ad revenue, doesn’t offer guarantees and insists on relying on computers, not humans, to pick videos it thinks users want to see.
That environment has generated lots of grumbling from YouTube’s partners over the last couple years. And it has prompted many big YouTube players to try to build businesses outside of the world’s biggest video site as well, either on sites they own themselves or with other video portals, like Microsoft’s Xbox.
New YouTube head Susan Wojcicki has begun making overtures to its most high-profile producers, said sources, with an eye to making them happier. Wojcicki, who has been a prominent ad product exec at Google and one of its earliest employees, has deeper experience in generating revenue with a multitude of partners, and many are looking forward to seeing how she will change the service’s offerings.
Nevertheless, sources said, she and YouTube still consider the platform to be the best there is, in terms of reach and monetization, for video makers. “Yahoo tried to keep up with Google and AdSense in online ads, but they tend to settle where they get the best results,” said one person.
Having the giant YouTube dominate the online video space is frightening to many. But while video makers have openly pined for a well-financed competitor to try taking on YouTube directly, none have surfaced yet. Both Facebook and Amazon are also kicking around plans to move more aggressively into ad-supported video, as The Information and The Wall Street Journal have reported.
Meanwhile, investors are showing renewed interest in YouTube-related businesses, sparked by Disney’s $500 million acquisition of Maker Studios, a YouTube network with 5.5 billion monthly views. Last fall, Erin McPherson, who at the time was Yahoo’s top video executive, joined Maker as its chief creative officer.
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