Raw and Random

Every day people send in 20,000 new videoclips to YouTube.com, which shares them with millions of Web viewers. Fifteen million plays a day—and counting.

Aboundless and voyeuristic appetite for amateur videos has lit up one of the hottest Web sites of 2006: YouTube.com. Spoofs and spankings, pranks and pratfalls, faded concert footage—visitors post 20,000 videos every day. The audience, numbering several million, watches 15 million clips daily, up fivefold in two months.

Don’t these people have anything better to do? Nope. YouTube, which didn’t exist a year ago, has shown awe-inspiring growth, even by Internet standards. Two tech pups—Steve S. Chen, 27, and Chad Hurley, 29, who had worked together at online payment firm PayPal, opened their business last year after having problems sharing video from a party. In November they raised $3.5 million from Sequoia Capital to cover minimal costs: bandwidth, salaries and rent. The site’s content, after all, flows in free.

YouTube went live on May 5, 2005 with the first few posts: some footage of Chen’s cat, P.J., and video of Chen and Hurley hanging out in Hurley’s garage (but of course—this is Silicon Valley). By December YouTube caught up to iFilm, a popular video site that just sold itself to Viacom for $49 million. Then it blew right past iFilm, and now YouTube attracts nine times as many Web surfers as iFilm.

The grainy home videos on YouTube provide a peephole thrill, blending reality tv and America’s Funniest Home Videos with Web logs. Its 20 employees designed the site to let bloggers insert any YouTube videoclip into their own sites. A blog’s readers can then easily share the videos with friends, spreading them virally.

But Chen and Hurley have greater ambitions—YouTube as an on-demand platform for clips, shows, ads, movies, movie trailers and custom fare. Marketers and media outlets are keen on this. emi, Virgin Records and VH1 have posted videoclips to the site. Apparel makers, watch brands and others have pestered YouTube to let them run promos. Nike airs an assiduously amateurish clip of soccer star Ronaldinho—and more than 2.7 million people have viewed it. Free promotion.

The other night MC Hammer, the faded rap star, stopped in at YouTube, sans entourage, to ask about promotional opportunities. Staffers shot his video—and posted it.

YouTube works in a small space over a pizza parlor in San Mateo, Calif., monitoring thousands of new videos by the moment, keeping servers running to deliver 200 terabytes a day from 15 host sites around the world and tracking comments and beefs about racy fare.

“Raw and random” is how Kevin Donahue, YouTube’s programming director, sums up the site. On a recent day in mid-February one clip surged to the top of the popularity rankings. It shows a stepfather’s cruel prank on his young stepson: The boy is playing a videogame and suddenly his screen flashes a picture of a frightening, evil face; the kid screams and sobs hysterically. “That’s just wrong,” Christopher Maxcy, a YouTube vice president, said as the staff checked out the new clip. Other Tubers chuckled in appreciation.

Many of YouTube’s tamer clips are highlights of network tv shows. The most popular to date (6 million downloads) is a Candid Camera-style skit from the Tonight Show on NBC: unsuspecting people being mocked by a talking photo booth. This just in: On Feb. 16 the same network forced YouTube to take down all clips of its shows, including its second-ranking download: “Lazy Sunday,” a Saturday Night Live skit viewers had watched 5 million times on the site.

A few other clip owners, including Fox’s American Idol and owners of footage from a 1968 Rolling Stones concert, also have had copyrighted clips taken down. But YouTube cleverly ducks most copyright issues by streaming all videos as Flash animations, not as downloads, preventing users from making digital copies. All uploaders must say they own the videos they want to share; if a real copyright holder later appears and objects to that claim, YouTube pulls the clip.

To keep its film raw but not pornographic, the firm uses software that can identify and block porn. Four Stanford interns work as censors, evaluating videos flagged as “objectionable” by the site’s users. After one Brooklyn artist put up video of her bare derriere being spanked by a friend, the clip got banned—never mind, she says, that a movie trailer on YouTube showed much the same thing. “It’s a little arbitrary,” she gripes.

Still to come: a way to make money on this. YouTube eschews video ads before a clip. When it inserted text ads, it apologized in the company blog, explaining it needed the money to fix the office sink. “It would be real easy” to reap ad sales now, but fans might balk later, Chen says. He will figure it out: YouTubers like to watch, even if it means enduring a few ads.

http://www.forbes.com/home/free_forbes/2006/0313/046.html