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Where are things headed now?

November 1st, 2006

I’ve afound that in order to see wherethe Internet is headed, it’s a good idea to be informed about where they’ve been.

Take video on the Internet. Now that the YouTube/Google sale has put Internet video on the map, what’s next?

First there was Netscape and Netscape made it easy to use the web.  Netscape was also, not coincidentally, the first Internet industry success story.

Then there was Yahoo and Yahoo made it easy to find things on the web. And Yahoo was the second big success Internet industry story.

With these two companies as a foundation, the web took off in a million different directions and fortunes were made in a countless number of ways – NOT by building a better browser and NOT by creating an alternative to Yahoo (unless your names happen to be Larry Page and Sergey Brin of Google), but by serving market niches.

YouTube is remarkable not only for the speed with which it became a billion dollar plus company, but also for the fact that they compressed the "brower" function and the "search" function into a single product.

Think about it.

Netscape made publishing to the web and using the web dead simple.

YouTube succeeded because it was the first company that made publishing video to the web and viewing video on the web easy. (If you haven’t uploaded video to YouTube and compared it with the process of uploading to other services, I recommend you’ll do so and you’ll instantly see why YouTube grew so big so fast and won the game.)

Yahoo helped make the Internet more valuable by offering an enormous and searchable collection of  an of web sites and pages.

YouTube did the same thing. If I’m looking for a particular piece of video, the first place I go is to YouTube.


Because YouTube is so easy to work with (upload to), they attracted the lion’s share of the content and I know from experience now that the odds of finding what I’m looking for on YouTube are exponentially higher than finding it on any other service.

All this may seem blazingly obvious, but unless I’ve missed it, I haven’t seen anyone come out and say that YouTube won because they were the easiest service to upload video to. Being easy to upload to led to tons of content which led to tons of viewers which led to more content which led to more viewers etc.  And you can see the results in their growth chart.

How important was the "community" and "social-networking" aspect in YouTube’s success?

Some  describe YouTube as a social-networking site  and there certainly was an element of that, but while I’m sure that social-networking played a role in YouTube’s success – especially in its early days when it was trying to get some traction – I’m equally convinced that ease-of-use was by far the most important ingredient in their success.

I seriously doubt that a poll of YouTube users would show that the majority of today’s users go there for "community." I’m going to go out on a limb and guess it would be 5% or less. People go to YouTube to find and watch (and upload) videos.  That’s the draw.

Two things that are I think are being way over-sold right now are:

1. Social-networking
2. Internet widgets (sites that slice and dice Internet content in interesting, quirky ways)


It all boils down to TIME.

There are 24 houyrs in a day. Eight spent sleeping. Ten or more spent dealing with the practicalities of earning a living and taking care of the infrastructure of daily life.  Unless  my math is faulty that leaves a maximum of six hours a day for "other."

"Other "includes movies, watching television, computer games, e-mailing friends, surfing the web, talking on the telephone – and those are just some of the media options.

Then there’s sports, exercise, actually talking with real people in real time (imagine that!), hanging out with friends, hanging out with family, religious practice, hobbies, "doing nothing"

Yes, I’m sure that there is a class of person who gets obsessed with their computer and  obsessed with a social-network web site or two, but even those people are extremely limited in the number of services they have time to use!

From this I conclude that there will be some clear cut winners in "big category" areas and we already know who most of them are:

For video: It’s YouTube
For photos: It’s Flickr
For personal blogs: It’s MySpace

Look, Rupert Murdoch, Yahoo and Google didn’t make their money by being dumb. They know where the eyeballs are and they grabbed them.   There may be some surprises down the pike, but for the most part the big properties are sewn up.

So does that mean all the opportunities are gone?

Far from it. In fact, for small player, the game is just beginning. 

Not only that, but I’d much rather be a small niche player than face the task of trying to monetize the marketplace of "undifferentiated people who upload photos" or "undifferentiated people who look at video online" or "undifferentiated people who like to blog and chat with their friends online."

Fifteen years ago, there was an industry (minus the video) that tried – and failed – to monetize these folks. It was called the BBS (computer bulletin board service.) 

BBSs were like primitive MySpaces. People "hung out" on them and some even built their social lives around them.

How do you target advertising in an environment like that? It ain’t clear and to a large extent Yahoo and Google and Murdoch got in the game not because they see how to make money from it, but because they have to be.  They are in the high stakes, high profile business of collecting huge numbers of eye balls and they can’t afford to let their competitors get a significant jump on them in that department.

Anyway, back to us… folks without millions of dollars in venture capital or big staffs oof technical eager beavers or the need to be reported on postively on a regular basis on the evening news.

How do we profit from Internet video?

We have an infinitely easier job. Because our businesses are niched, we know who are customer are, what they want, and most importantly what they buy.

For us, video is a method to get people to come to our sites more often, stay longer, and interact more with our offerings. Sometimes we’ll offer 100% content, sometimes we’ll pitch products, sometimes we’ll mix it up.  The key is more people spending more time listening to more of our messages.

If you’ve picked your niche carefully you already know how to make money from the audience. Video becomes a tool to further cement your connection with your customers so you can make more money. Simple, isn’t it?


P.S. Do you want to be notified when new articles like this one are posted to the blog?

Ken McCarthy was one of the pioneers of the movement to commercialize
the Internet and was involved in early tests of what have become
Internet promotion mainstays like e-mail marketing, banner ads, and
pay-per-click advertising.  If you go to Google Video and search the
term "marketing,"  a short film about his work is often in the top ten,
if not the number #1.

It’s easy. Just go to this page and we’ll add your name to our bulletin list:


Copyright: Ken McCarthy, 2006

Reprint rights: You may reprint this article in full as long as you print it in it’s entirety including the P.S.


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  1. November 1st, 2006 at 11:27 | #1

    Hi Ken,
    Thanks for your interesting articles.
    Please provide more ideas on how to attract visitors with video. I want to add it to my marketing strategies but am not totally sold on its effectiveness compared to other methods ie SEs, articles.
    I just finished creating my first video(see URL). Uploading it to YouTube decreased the quality so I look more like a ghost (maybe because I did it on Halloween Day:-)
    Why is this…are they saving bandwidth?
    The quality is much better when linking to the .MOV file.

  2. November 1st, 2006 at 11:54 | #2

    Ken, what’s your take on video without audio?
    Here’s my challenge, I’m using video to demonstrate how our web-based service for mortgage professionals works (click on my name below to view the URL).
    However, the .wmv file is pretty large because the video presentation is text-heavy and the resolution needs to be high enough to read the text. Adding audio just made the file larger so we decided against it for now.
    I’m trying to find a balance between video content that’s useful versus video content that takes too long to download. But, my gut tells me that people prefer to watch video with sound. Should we reconsider audio?

  3. November 1st, 2006 at 11:55 | #3

    Hello Ken,
    Very interesting and insightful article.
    You’ve hit the nail on the head. Identifying your niche market is the key to competing with the big national players with the deep pockets.
    The second key to success is making your process simple and easy to understand and navigate.
    Research suggests that the national average reading level is around the eighth grade. I believe that the same is true regarding the technology level for many markets.
    However, whether this is true for one’s particular target market comes down to knowing your market in detail and then structuring your marketing process accordingly.
    Thanks again for the article.
    Keep up the exceptional work.

  4. November 1st, 2006 at 13:24 | #4

    Thanks for another thoughtful article, Ken.
    Out of curiosity I had a look at the video without sound (Robb’s posting). My first reaction was that you would need to be really dedicated to not navigate away while the first segment was buffering. I then watched about half of it and my second reaction was that it was more of an instructional video for people who had bought the software than a video to tell them how much easier their life will be with it… so my conclusion was that the website would be better with a short video of someone talking about it (preferably a customer, and arrange it so it doesn’t open in Windows Media Player) and keep this for people who have bought and who would, therefore be motivated to watch it.
    Hope these comments are useful.

  5. Valerie
    November 1st, 2006 at 13:48 | #5

    Yes, through the first half of your article you had stated the “Obvious” of who, what, and why…
    Now let’s spend time discussing and exploring more valuable ideas about different niche markets and business models related to online video, that can be applied by small businesses and entrepeneurs.
    Further, I would enjoy reading about success stories of other entreprenuers and small businesses using online video – perhaps you should solicit for success stories and publish somewhere on your blog/newsletter.

  6. November 1st, 2006 at 13:52 | #6

    Great article. I might dispute that MySpace is THE dominant web site for personal blogs. I have a sixteen year old daughter and she tells me MySpace is over and that everyone has moved on … to Facebook? Take it at face value. No pun intended.

  7. Pat Dowdy
    November 1st, 2006 at 14:25 | #7

    While video blogs attract paying advertisers, true enough, a perfect niche is one that catalogs the blogs. Some days I need laughter, others I want to indulge my philosophical side. The Internet is a huge haystack to seach out the needle I”m looking for an any given day. No pun meant.

  8. Ken McCarthy
    November 1st, 2006 at 16:46 | #8

    MySpace is out. Facebook is in?
    Ah, the challenges of selling to the teenaged market…
    Sound and video question…Unless there is an incredibly compelling reason not to, include sound.
    Contrary to what you might expect, poor video is acceptable to viewers. Poor or no sound is not.
    Bad sound will completely mess up “the suspension of disbelief” that’s required to make a video *work*
    Think silent movies. After the novelty wore off, silent movies stoped working for the audiences so promoters had to add live piano players.
    Think about foreign movies that have mismatched dubbing. Messing up the dubbing is the quickest way to make a film look ridiculous.

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