History of YouTube

First, we'll start by looking at YouTube as the startup-turned-company. We'll see how it got to where it is today, how it plans to make money, the acquisition rumors that have circumvented it for the past few months, its hasty bandwidth bills, and the legal issues the company has so far had to put up with.

Background

YouTube's Founders Chad Hurley and Steven Chen. Image Credit: AP Based in San Mateo, YouTube is a small privately-funded company with 60 employees. Chad Hurley, one of its co-founders, serves as the CEO with its other two co-founders Steven Chen, CTO, and Jawed Karim, Advisor. So far, the company has raised over $11 million of funding from Sequoia Capital, the firm who also provided initial venture capital for Google, Yahoo!, and Apple in their early days. Their tagline is "Broadcast Yourself" and this largely represents their goal.

History

YouTube was founded by three former PayPal employees, who, witnessing the boom of online grassroots video, realized the need for a decent service that made the process of uploading, watching and sharing videos hassle-free. They registered the domain YouTube.com on February 15th, 2005 and developed the site over the following months from a garage in Menlo Park. In May 2005 they launched in a public beta, and in November, YouTube made its debut with an $3.5 million of funding from Sequoia Capital.

To get a decent start and attract the initial crowd they were looking for — teenagers, college students, hobbyists, film-makers — they came out with a contest that promised to give out one iPod Nano to a random member each day, which ran for two months. This contest worked on a point-based system, for example one point was rewarded for signing up, one for inviting others, another one for posting a video, etc. The more the points you gained, the higher the chance of winning you had. This was a significant action that got YouTube noticed by the masses and gave it a headstart as per the signups. After all, if you knew you had a chance to winning a $250 iPod Nano just by signing up and posting that Uncle Bob's funny biking incident clip you've had on your hard-drive for the past few years, wouldn't you?

Now, after being the host (and former-host) of countless SNL segments, Superbowl ads, TV goof-ups, Anime mashups, Nobody's Watching episodes, Sporting segments, Shakira music videos, and most recently the Lonelygirl15 installments — which have managed to receive more than 90 million views in total — the result? World's fastest growing website at present, YouTube!

Business

YouTube's Business Aspect While the service is completely free for the users, the company's business model — which was put in place in March 2005 — is based on traditional banner advertising, sponsorships, partnerships and promotions, and even contextual advertising. So far, they've had numerous partnerships with traditional media companies, notably NBC and the Warner Music Group.

There has been a lot of debate over YouTube's business, with claims that it is purely based on copyrighted infringements. Billionaire Mark Cuban was recently quoted in a News.com article saying "anyone who buys YouTube is a moron." While it has only been faced with one lawsuit by Californian journalist Robert Tur over copyright infringement, it has had to take several videos down to settle matters, most notably the SNL skit Lazy Sunday over NBC's requisition.

Bandwidth Costs

On April 2005, a Forbes article cast a spotlight on YouTube's bandwidth bills and how much of a limitation this is to its business. The article claimed that the site uses 200 terabytes a day which easily approaches to a $1 million monthly bandwidth bill. What's surprising is that this was even before its peak in June/July in which the site doubled in traffic.

Ever since it began, the company has had a stronger goal to build a community than to make a lot of money. But with the growing phenomenon, now with more than 65,000 uploads daily and 100 million videos being watched, they've had to kick-start their business plan in-order to sustain the growth.

Valuation & Acquisition Rumors

Over the past, YouTube has been rumored to be in talks with many companies for a potential acquisition. In these, include Viacom, Yahoo!, Disney, and Sony. Most of them have turned out to be false, or have never panned out.

Recently, however, there were claims in the New York Post article (which has since been taken down) that they won't be considering any offers below $1.5 billion for a sellout. With the number of copyright infringements the company has dealt with, and the seven-digit bandwidth bills, it is unlikely that this pricetag will sustain at such a high value.

By : Sid Yadav

Source : www.rev2.org