Mark Cuban: YouTube Finally Took My Advice

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Is Mark Cuban coming around on YouTube?

The Dallas Mavericks owner (and guy who sold to Yahoo) has been a vocal critic of YouTube’s business forever — way before Google spent $1.65 billion to buy the video-sharing site in 2006. In September 2006, he told Reuters: “Only a moron would buy YouTube.”

Mark’s main point has been that the vast majority of YouTube’s content is impossible to monetise — either because it pirated or just plain crappy.

Over time, Google (GOOG) and YouTube execs came to share this view and began licensing content from premium sources like Disney and MGM. (Hulu’s success has been a remarkably effective wake-up call.)

Watching this trend develop, Mark told us in mid-2008 that we’d know YouTube’s licensing business was getting somewhere when we started hearing two things:

  1. Management saying they know how to monetise.
  2. Content providers bragging about how much money they are making, which in turn would act as digital gravity to every content producer in the world.

And, lo and behold, during its earnings call last week, Google execs for the first time began claiming they knew how to make money off YouTube. Google’s sales boss Nikesh Arora told analysts that YouTube had tripled its “monetizable views” in the last year and that the site will be profitable soon.

On the second point, YouTube put out a release today, trumpeting the success of its “premium content partners.”

We have thousands of premium content partners, from Sony to Disney to Universal Music, and fans can find hundreds of full-length feature films and thousands of full-length TV episodes on YouTube. The world premiere of Joy Luck Club director Wayne Wang’s film, “The Princess of Nebraska,” was viewed 165,000+ times during the first 48 hours — the equivalent of landing the 15th spot on Hollywood box office charts.

So, his prophesies nearly fulfilled, has Mark Cuban finally come around on YouTube’s business viability? The short answer: No, but they’ve been smart listening to my advice.

Here’s what Cuban told us in an email:

Haven’t changed my view at all. They still face the Viacom lawsuit.

But I give them credit for completely revamping their business model and doing what I suggested way back when. Which was to stop hiding being the DMCA and start licensing content. Which is exactly how they are increasing their monetized views.

There are now 2 Youtubes. The UGC hosting site, which I am sure is losing its arse. And the new version of Youtube, which is like every other video site on the net. It licenses content and sells ads around it. This isnt a bad business model when you have the traffic generation ability of Google, along with the best bandwidth prices in the business.

If they get out of the UGC business, they actually would be profitable.

And one more note, The Princess of Nebraska was distributed by one of our companies. Magnolia Pictures. It did more for Youtube than it did for us.

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