YouTube's New Deep Pockets
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YouTube has become a cultural phenomenon that is as addicting as it is outrageous. By definition, it is a Web site where members post videos of everything under the sun onto a page where other members can easily view them with a click of a mouse.

The site features everything from pornographic videos to artistic visuals, and has recently become educational with the latest addition of a campus section. SF State is one of the school groups that are featured, but with more than 70 members and growing, it is still is in its infancy.

“I use YouTube just to watch videos that my friends post up… I also watch videos of other people’s creativity,” said industrial arts major Jeoffrey Batangan.

Overall YouTube makes up for 57 percent of all videos viewed online, according to CNNmoney.com.

The Web site is breaking ground with Internet users and is rapidly becoming the next MySpace, the social networking phenomenon recently purchased by News Corps.

The competition spurred tension between the two Internet giants when MySpace once tried to block YouTube for copyright issues. Copyright infringement has been YouTube's biggest nemesis and was the problem that most critics thought would cause its demise.

However, everything changed on Sunday, Sept. 17, when YouTube blurred boundaries by signing its first commercial partnership with Warner Music Group. The joint venture now makes sharing and downloading music videos produced by Warner Music Group legal and more readily available.

The pact enables YouTube to avoid any copyright infringements and Warner will be reimbursed for the videos that were already streaming through the Web site for free.

Still, some in the industry see the partnership as a little unconventional; insinuating that both companies are making deals with the enemy, depending on which way the situation is viewed.

Universal Records made harsh comments regarding the Web site just days before the signing, stating that YouTube and MySpace are "copyright infringers" who are said to owe the music industry "tens of millions of dollars," according to a New York Times article. It is safe to say Warner Music Group is catching some heat from its colleagues.

But most users are grateful to finally legalize what people have been doing in excess anyway. SF State Professor Foo-Nin Ho, who has been teaching marketing on campus for 14 years, is excited about the transition.

"I think it is going to be interesting," Ho said. "YouTube is charting new territory and I think the music industry will be interested to see how the legal issue plays out."

The two groups will share the advertising revenues that will be generated by advertisements viewed along with videos. Advertising is YouTube's primary source of income, though their annual income from advertising is a number founders Chad Hurley and Steve Chen will not disclose.

Ho said the company is valued at nearly $1 billion and is in the top three for video downloads along with MySpace and Yahoo. However on Oct. 9, YouTube’s value went up to $1.65 billion when Internet super-giant, Google, bought the company, making it the most expensive purchase for Google in it’s eight year history.

The big changes for the popular site have students at SF State excited, but not without worry.

“I think Google buying YouTube is just another example of a big corporation buying out an independent company," 18-year-old music major Zach Parks said. "I hope it doesn’t change the content on it because it’s a great site.”

As far as the Warner contract, Ho says he hasn’t heard a lot of enthusiasm about the change. When he mentioned the transition to a class of 150 students, no one made a remark.

Ho said iTunes is still a big competitor for YouTube as far as the music market goes, but sees great potential in the video aspect.

"All of us don't have a Hollywood studio to make videos and to produce them for us, so that is why I think people are attracted to YouTube," Ho said.

The partnership will soon release its marketing capabilities. The first project that Warner will collaborate on is the promotion of Paris Hilton's new album on the Web site, and they will continue to promote other Warner Music Artists such as Madonna and Sean Paul.

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