YouTube is Hulu’s stepping stool
By Danny Mendez
YouTube is Hulu’s stepping stool to profitability, allowing the new-ish business to reach the tempting jar of change atop the World Wide Web house refrigerator, and it’s not sharing any of the booty with our favorite user-driven video network.
That’s fundamentally Mark Cuban’s analysis on the relationship between the two companies. The American billionaire entrepreneur is also known for being an outspoken critic of YouTube’s business model, and heavily criticized Google for buying the video-sharing site almost exactly two years ago. The businessman believes YouTube is unable to make a significant profit because of the way it operates.
Coming up on the two year anniversary of his declaration that “only a moron would buy YouTube,” he delve into how Hulu’s business model is much more profitable than YouTube’s.
YouTube’s biggest flaw is that it can’t advertise on most of its videos. In fact, it can’t advertise on any user-submitted videos, which make up almost all of YouTube’s content. The YouTube staff isn’t even supposed to know what’s in those user-submitted videos in order to use them under fair-use law. Unless Google can come up with something really creative, YouTube may never manage to make a good dollar.
Hulu, a much newer business, has a much smaller video library than YouTube, but it can sell all the advertising it wants in and around its syndicated content. Hulu users must watch advertisements in order to watch shows, movies, or clips, and that really pleases advertisers while also pulling revenue for the site.
Furthermore, Hulu uses the Google owned site to increase its audience via the official Hulu channel on YouTube. All of the videos in that channel are clips featuring adverts edited in by Hulu.
As a result, countless web-browsers are sent to Hulu everyday because of the free video hosting YouTube provides — at YouTube’s cost, of course. Hulu’s audience grows and will continue to grow, and it can monetize all of its growth unlike YouTube. As Hulu’s audience increases, it will become more valuable to advertisers, effectively attracting more and better content and increasing the cost to YouTube for such content — once again at YouTube’s cost.
Now excuse us while we go check Hulu for any new BattleStar Galactica episodes.
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