Lightweight Models and Cost Effective Scalability – YouTube

8 05 2010


Web 1.0 to Web 2.0

During the earlier stages of the web developments the information that you see was very static. Users’ were only able to read and view pictures from the webmasters’ site, which was also known as “Web 1.0”. However, in today’s era, the emergence of Web 2.0 has revolutionized the way we use and view online information. This development has attracted a lot of organizations to incorporate and take the advantage of its potential to leverage a cost effective business scalability, which is applied to business models as well as technology (Watson, 2010). In addition, organizations are being influenced and actively investigating in the innovative ideas to learn from major web players such as Amazon, eBay, Live, Google, Yahoo and many of the social networking websites.
When applying web 2.0 in a business model there are two primary areas that online organizations focuses on; this is the improvement of the organizations efficiency and productivity, and its service to customers to improve revenue and customers satisfaction (Platt, 2010). A great example of this would be an application that we have all probably have heard and used — YouTube. It is an ideal application that demonstrates the use of scalability in an online organization. According to Watson (2010), the motto for web companies before was “get big fast”, now it’s “small is the new big”. To put it into scale and better clarification, YouTube has approximately 4.8 million users which was developed by a pre-google team of 2 system administrators, 2 software architects, 2 feature developers, 2 network engineers and 1 database administrator (NumberOfNet, 2010).
YouTube’s business model basically revolves around its users. People in general love to be entertained and YouTube is very good at delivering that by allowing video uploads. It harnesses the collective intelligence of the users’ talents by allowing them to produce contents, which is used for generating revenue through online advertisement (Sain, 2010).
Comparison with other web 2.0 applications
Like YouTube, there are several other online video sites out there which are trying to compete. Some of the top 5 video websites are; YouTube, MySpaceTV, Google Video, Yahoo! Video, and Veoh. However, YouTube has the largest market share standing at 75% among all its competitors. According to Kirkpatrick (2008), YouTube’s dominance in online video was bigger than Google’s dominance in search. This caused the nearest competitor, MySpaceTV to suffer a dramatic decrease in its market shares which fell from 44% to 9%.
Critical and strategic implications
Technology has assisted people in performing their tasks more efficiently and to get results more quickly. The internet has allowed us to do this by spreading information fast in many ways; you can upload your text, pictures and most all videos. YouTube has given that advantage to its users and many are making use of it by advertising their videos (e.g. commercials and trailers). It is also a way for businesses to save money by uploading their advertisement on YouTube because it’s free and accessible by the public. An old saying goes “A picture is worth a thousands words”, hence by having a video that shows multiple images you will be able to expand its meaning dramatically (Wong, 2010).
Here’s a Beautiful Coca Cola Commercial:
Other than that, the convenience of having an online video has allowed other organizations to look at it as a new mode of business communication. Since YouTube videos are easy to distribute companies are using them to reduce the training costs, and the costs of customer support. Instead of calling or physically meeting up with employees videos can be distributed within an organization. This is also another way for YouTube to improve its revenue. If the prices are reasonable – $5 or $10 for a few thousand views of a 20 second bit, people will pay. In addition, YouTube will be able to leverage this advantage over existing organizations as a video solution because it’s fun, easy, and appealing for people to use it (IC, 2006).
Legal and ethical issues
One of the biggest issues with YouTube is the copyright infringement of videos being uploaded. Its rapid growth and network effect has caught many consumers and marketers to use videos as an advertising solution. One of the main reasons why people love to use YouTube is the ability to watch previous television shows such as CSI or watch segmented documentaries from Discovery/National Geographic. However, YouTube never had the permission to actually air these recorded videos and they are making a lot of money off them for FREE! Furthermore, some of you might have experienced unavailable videos on YouTube that has been deleted due to copyright infringement. People are positing videos without the right to do so, leaving YouTube to clean up the mess before the video-sharing site finds itself involved in another legal mess (Jones, 2007).
Future directions
According to some analysts, YouTube has a promising future, but it might also face a dreadful unforeseen future like the original Napster. Either it’s going to be sued and will lose, or the company will be forced to take down much of the contents that users like. YouTube is hoping to convince the Universal Music Groups of the world in order to show a promising future for everyone to make money. As an example, companies like NBC have already begun to upload promotional clips to advertise their shows like Prison Break. In addition, YouTube has done an excellent job in providing great services to its users in order to maintain a strong traffic. The contents are very interesting, advertising is minimal, and the contents are readily available for a multitude of online devices (Bangeman, 2006).

  • Bangeman, E. 2006. YouTube’s Future (or lack thereof) (accessed May 8, 2010)
  • IC. 2006. A YouTube Business Model in the Enterprise (accessed May 8, 2o1o)
  • Jones, A. 2007. YouTube’s Legal Issues Grow (accessed May 8, 2010)
  • Kirkpatrick, M. 2008. YouTube Continues to Destroy All Competitors in Declining Video Market (accessed May 7, 2010)
  • NumberOfNet. 2010. Number of YouTube Users (accessed May 7, 2010)
  • Platt, M. 2010. The Architecture Journal: Web 2.0 in the Enterprise (accessed May 7, 2010)
  • Sain, L. 2010. A look at YouTube’s business model (accessed May 7, 2010)
  • Watson, J. 2010. Week Ten Lecture: Web 2.0 Application (accessed May 7, 2010)
  • Wong, R. 2010. The power of online video (accessed May 8, 2010)
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    6 responses

    10 05 2010
    Stefan Borenich

    Great blog!
    I totally agree with it and Youtube is a good example.
    I wonder how long Youtube survive with all these legal and ethical issues because the pressure of the music industry and the movie industry is high. Not that I think that Youtube will close down, but I think that they are going to make some huge changes in the next couple of years. What do you think?

    10 05 2010

    It is an interesting aspect to consider, how exactly in the future, YouTube is going to handle its Legal aspects. The current model that they use can only last so long, and a comprehensive rights usage would be very expensive and probably not really worth it.

    Another option though it to change national and perhaps international legislation to cover it in certain rights. But that is also unlikely.

    10 05 2010
    Kenneth Chan

    i agree with jack, i wonder how YouTube is going to handle all these legal and rights issues with the movie and music industry booming all the time, youtube would probably not close down but the restrictions on some of the content would really need to be settled if they hope to maintain a steady stream of users.

    12 05 2010

    Great explanation Amiel!

    12 05 2010
    Leslie Wong

    Very comprehensive blog Amiel! Youtube is a great application, so simple in its delivery and the most important factor – provides a lot of fun and enjoyment for its users.

    12 05 2010

    Hi Amiel,

    Interesting article on YouTube, as my blog topic was the same! I think YouTube is going to become the TV of the future. I know its a far fetched claim, but it seems to be heading that way already. If music groups and channels cooperate, this could be the start of something great.



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