Using a prop of a YouTube video illegally loaded to the site, Hulu CEO Jason Kilar made the case at the National Association of Broadcasters 2008 conference, that Hulu was the best and safest place to put their video content online.
Kilar added that copyright clips posted to YouTube without authorization didn't make the owners of the content any money, but by using Hulu, video producers could monetize their content, while also allowing the video to be sent virally around the web.
In the short time Hulu has been available to users, videos from the site have been embedded over 100,000 times on over 12,000 sites, according to Kilar.
While the original distinction between Hulu and YouTube (Nasdaq:GOOG) is in general true (long-form professional versus short-form amateur video), video fans will have to be enticed away from their interaction with YouTube in order for Hulu to make a huge impact in Web video.
That, and marketing to more mature users is important to me, as they will be more apt to migrate to Hulu and be more faithful to using it. The challenge there is it takes longer to reach out to older users than younger users on the Internet.
Even though Hulu has some strong partnerships, there is no doubt they want to land the other big three: CBS (NYSE:CBS-A), Viacom (NYSE:VIA-B) and ABC (NYSE:DIS). I think this talk by Kilar and recent comments by executives connected to Hulu are meant to woo them into the fold.
If they make deals with YouTube it'll be more difficult to differentiate between the two, because the Hulu brand will be weaker without them, and professional content would be offered by YouTube and Hulu.
Part of the frustration and challenge is to show that much of what YouTube offers professionally is unauthorized, and monetizing professional content is far more lucrative on Hulu. In that respect Kilar is right. If professional content in on YouTube without authorization, people are getting it for free. That does nothing for the content creators and owners.
This is just the beginning volley in what should be a long battle between the two web sites. Google and YouTube have a challenge ahead of them as well, as the site is extremely expensive to run, and it isn't considered trustworthy by advertisers.
Most the user-generated video has no value for advertisers, so YouTube must battle for professional video content in order to place advertising against it to justify its acquisition of YouTube.
The reason there's been no rebellion by shareholders so far is Google, for the most part, has been continuing to exceed expectations, other than the last quarter of 2007. When they finally slow down (which they will), that will be the time pressure from shareholders concerning YouTube will begin if they're not helping the bottom line.
Google knows this and is working on making that happen. General Electric (NYSE:GE) has been going through that with NBC Universal, which does make money, although it's been incremental growth.
Every time a slow quarter comes, calls to drop the NBC U division is revisited by GE shareholders. That will start to happen with Google when earnings growth declines, and if they haven't figured a way to successfully monetize the video-sharing site.
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