The Upside to Video Uploads

Set apart from the file-sharing rebels by copyright cooperation and ad income potential, user-created video sites will continue to flourish.

Over the past six months, a new generation of video Web sites has captured the attention of Internet users, the press, and investors. Revver, YouTube, Grouper Networks, MetaCafe, and Guba—along with more established players such as Google (GOOG), Yahoo (YHOO), iFilm, and Microsoft’s (MSFT) MSN—are all jostling for attention in the user-created video space. Even AOL (TWX), seldom a leader, implores its subscribers to “break out your video cam and fill us in.” This explosion in user-generated video led some analysts to predict recently that the video site “bubble” is ripe for collapse.

While this segment will undergo consolidation and specialization, a mini dot-com implosion is simply not on the horizon—and especially not for the reasons being cited by some pundits. Predictions about this collapse have focused on two issues: the lack of a business model and persistent problems with copyright, as many of these sites—even the esteemed Google—have run afoul of content owners by hosting copyrighted content without permission.

First, this segment is being driven by multiple factors that are fundamentally growing the capacity for everyone to create video content. While the online revolution began with music, it still takes talent and hard work—or at least a lot of fancy engineering, overdubs, and a hefty marketing budget—to create music that attracts and holds the interest of a substantial audience. Your boss may want to hear himself sing in the shower and maybe even his kids and mother like to hear him belt one out, but the rest of us could probably skip owning the MP3, even if his shower has great acoustics.

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