Robert Kyncl, YouTube Global Head of Content, gave a great speech at MIPCON 2012 that’s very much like the one he gave at CES 2012 Las Vegas. The overall focus was that content is king and the cost barrier to entry for a content creator is lower than ever.
In other words, you can produce a viral video without spending a dime and make a good income from it (well, it does call for a time investment). Here’s his speech, and then a panel conversation, below. Then, that’s followed by the text of his speech.
A quick show of hands: how many of you think content is more valuable than distribution? How about the other way around?
It’s an age old debate. What’s really the difference? Audience.
One has an audience– the other owns it. You need to be in the audience business and that’s what I’m going to talk about today.
Take Jerry Seinfeld. He created one of the most successful franchises in TV history. According to Forbes, he amassed a fortune of $800 million. He definitely built a very large audience.
Now let’s look at Haim Saban. He built Fox Kids and sold it to Disney for $4 billion. Then he invested in other networks such as Prosieben and Univision He built audiences around networks and is now worth $3.5 billion.
What’s the difference? Seinfeld has an audience, Saban owns it.
But it’s not just individuals; it’s also large media companies. All of the large media conglomerates make a lot of great content but they also own the audience. More than two thirds of their revenue comes from owning the audience.
Over 20 years ago, it cost $5 million to launch Eurosport. Today, Discovery spent $300 million to launch OWN. Historically, being in the audience business is hard. It doesn’t have to be. Why? YouTube.
More than 800 million people are watching 4 billion hours a month on YouTube. Just to put that in context — that’s 7 Super Bowl audiences every 30 days.
And content creators are starting to take notice. From makeshift studios to well-known tastemakers like Jay-Z, James May, Jamie Oliver, Liz Murdoch and Nagui. People are getting into the audience business on YouTube.
Take PSY. 3 months ago he was big in Korea. Today— 300 million views later—he’s big everywhere. Why? YouTube.
Another huge artist on YouTube, Justin Bieber. His manager told me that Justin now only uploads long form content to YouTube. I was puzzled by this and asked what he meant. He explained that anything over 30 seconds is long-form. What’s short form to me is long form to them. What I like to watch on TV, they like to watch on a phone. Audiences are changing rapidly. If you want to keep up, you need to program for them on YouTube.
Warner Bros gets this. They’ve partnered with Brian Singer (X-men, Superman Returns) to launch an original series on YouTube. Let’s take a look. [Video]
Warner Bros is not only creating original content for the web.
They are also harnessing the value of their library by reaching their fans on YouTube. How? They’ve partnered with a company called Zefr, which helps manage their videos uploaded by fans. This is a brand new revenue stream for Warner Bros. And if you own a library of content, you can do the same. And this is a win for Zefr too. In fact, they just raised $18 million in funding.
Speaking of funding… Whenever you see a shift in consumer behavior, investors sit up and pay attention. The VC space is heating up. Machinima, AwesomenessTV, Blip.tv, Balcony. TV, Zefr
have all raised capital this year.
It’s not just investments into the space, we’re starting to see exits. Large media companies are buying channels on YouTube the same way they used to buy cable networks. History repeats itself.
This is exactly what we were hoping for when we decided to supercharge the ecosystem last year with new channels in the U.S. And these channels are off to a great start: The Top 25 are already averaging over 1 million views a week and accelerating.
That’s why we decided to partner with companies in the UK, Germany and France. Companies like BBC, Shine Group, Banijay Group, Mediakraft and Endemol are all getting involved.
Let’s take a look [Video]
All of this momentum would not be possible without revenue. Let me tell you what YouTube is doing differently: we’re making ads optional. Viewers can skip them if they don’t like them. This is a big deal. The advertiser only pays for ads that are watched. Viewers only watch the ads they care about. When that happens the advertiser pays more. That means content creators make more. Everybody wins.
So, is this working? Let me share something with you. When we look at our skippable ads in the U.S. we are now making as much revenue per hour as ads on cable TV. Let me say that again: we are making as much revenue per hour as ads on cable TV. That’s made possible by great brands such that are spending increasing amounts on YouTube.
So how does all of this fit into YouTube’s big picture? Think of it like driving a car. When we launched in 2005, we were global but local nowhere that’s gear 1. Then we localized content and advertising. That’s gear 2. Today we’re in nearly 50 countries and we just launched Turkey last week. Last year, we liked what we saw in the U.S. and decided to fund programming brands on YouTube. That’s gear 3. Today, we announced that the UK, Germany and France all moved into Gear 3. We’ll stay in Gear 3 for another couple of years but then we’ll supercharge successful partners on YouTube to the next level: gear 4. And when we hit Gear 5, all systems around the world will be at full throttle and it’s full speed ahead.
So what does all of this mean for you? Just like Haim Saban you need to be in the audience business. Thirty years ago, cable expanded the broadcast universe just as YouTube is expanding cable today. What cost EuroSport $5 million, cost OWN $300 million. The time is now, the moment is right. Start building your audience on YouTube today. Join us.