YouTube’s Identity Crisis

The channels promise to bring high-quality professional video to visitors, but that was never the purpose of YouTube. Sure, it was home to plenty of pirated content — who can forget “Lazy Sunday” — but it was more known as the home of cliched cat videos, cute babies and dogs on skateboards. It is where you turn to find a 20-year old clip of Ross Perot running for president or the lyrics to the theme song to Charles in Charge. Alongside, YouTube has also spawned a slew of born-on-the-Web stars, production companies and all sorts of non traditional talent and series with real audiences.

The latest TV show? That’s when you head to Hulu, iTunes or somewhere perhaps not totally legal. For most people, YouTube is about random, short clips (per ComScore, YouTube user sessions in September averaged nine minutes, or about three minutes per clip). And changing that mentality is a serious challenge for Google — albeit one with a huge payoff since it’s hard to see this move to regular, dependable programming as anything more than a play for a bigger chunk of the lucrative video ad market. Still questions abound.

Talk to people in the digital video space and they’ll say privately that while YouTube boasts of a massive audience, and is generally an excellent partner, it has a consistency problem. That’s part of the reason why so many shows debut big and then fade fast. “They know they have trouble bringing people back,” said one programmer.

YouTube also doesn’t exactly have a great track record in the world of long-form programming. Remember back in 2008 when, as a reaction to Hulu, the site added episodes of shows like Star Trek and Beverly Hills 90201 Know anybody that watches lots of 90210 on YouTube? How about movies?

“We have high hopes,” said  Roy Bahat, president of IGN Entertainment. “It’s a chicken and egg thing. It’s going to be about design and packaging. If anybody can make it is YouTube. Whatever they do won’t go unnoticed.”

Added Damon Berger, co-founder Disrupt/Group, which is behind Web series such as What’s Trending?: “Google is one of the smartest companies on earth, and YouTube is the most powerful video platforms and search platforms.”

But one top digital programming executive was less hopeful, and more underwhelmed by the lineup. “This feels very portal,” he said. “How is this not just like something MSN would do?”

“I don’t know if I’d agree that YouTube needs to change consumer expectations,” said Greg Goodfried, co-founder of EQAL, and one of the brains behind the famous Web series lonelygirl15. “Are they trying to become more mainstream? Yes. But YouTube has a big audience.”

“Google has never said, ‘We are an editor,’” said Berger. “YouTube has no editor in chief. There is going to have to be a programming layer. That’s not what their game has been about traditionally.” Maybe it needs to learn a new game, fast.

Google’s algorithm also needs to work overtime — as program recommendation will become of paramount importance. “Discovery is harder the more content there is,” said  Shira Lazar, Berger’s Disrupt partner and host of What’s Trending? “And they’ll be programming 25 hours a day.”

Not until these shows prove to attract an audiences. It also depends on where inventory nets out (part of the reason Google is pushing skippable ads is to keep that under control). It’s more likely that pricing for ads on these channels will fall between video ad networks $5 CPMs and Hulu’s $40 CPMS.

“These new channels are a big carrot for advertisers,” said Goodfried. “Right or wrong many of them will be attracted to sponsoring shows that have a TV or film resume. And hopefully they’ll then learn more about YouTube [native] shows.

To try totally different stuff. Most programmers that have been on YouTube for a while don’t plan to ditch their long-running subscription channels. “We’re going to be investing in YouTube in totally different ways,” said Bahat. “We’re looking for ontent that is meant for a big screen. This model lets us test a bit. “

IGN, in conjunction with News Corp. sibling Shine, is launching Start, a new video game-themed channel on YouTube. “There has yet to be the Justin Bieber of TV. Nothing monster or huge like that . And that’s what we’re going for. This is the biggest effort for our company this year.”

Rob Barnett, founder and CEO of My Damn Channel, echoed those sentiments. “This is about brand new programming and a brand new destination,” he said.  “We’re programming in a completely new way. It’s all additive. This is going to shine a much brighter spotligh ton new content. It’s very different than traditional media.”

It will be a major mistake to just replicate traditional TV formats, say experts. “The audience there is pretty naturalized,” said Berger. “There is lots of interaction with the community. And there is a very different voice.”

“These guys have built their audiences on being consistent and on a schedule,” added Lazar.

Promotion is also huge. And that typically costs money, which make the economics even tougher. “I’m a big believer in something you don’t see a lot of online –you need to spend a significant portion of every series’ budget on promotion,” said Barnett. “You can’t close your eyes and wish and hope to get an audience. Otherwise you’re playing a dangerous game. It’s a very very competitive environment.” So competitive that lots of channel partners will end up spending ad dollars on YouTube to promote their shows?

People will notice. The question is, will YouTube be able to stay as open as it’s been about viewership? “Six months down the road, the audeince and advertisrs are going to take a good hard look,” said Barnett.

In most cases YouTube does, which is great for companies that have a sales force, but it also makes the economics potentially tough for indy content producers, depending on the revenue share agreement. Partners are generally said to receive a majority of dollars in most arrangements. In the case of MyDamnChannel, they are selling ad treatements in conjunction with YouTube. Meanwhile, News Corp.’s IGN is one of the few partners with the rights to sell its ad space before YouTube.

One looming question: can producers still cut their own product placement deals directly with brands without YouTube taking a cut? YouTube has generally allowed this practice in the past.

Aside from a few cable networks like HGTV, most of the broadcast and cable networks are conspicuously absent. Don’t hold your breath for Viacom to jump on board. It’s doubtful that many of the Hulu partners will sign on either.

It technically already is, and Google has been pushing its lean-back mode for long-form content for a while. And clearly the YouTube channel launch is partially aimed at making the revamped Google TV more appealing. But for now, is it worth programming for that audience? No, says  Goodfried. “You’d need to see a huge jump in adoption,” he said. “Right now so few people watch YouTube on TV.”