YouTube Keeps Growing, but for How Long?

Even YouTube admits that they don’t have any clear sense for where this growth is headed over the coming months. "Our numbers continue to grow exponentially month after month, so it’s nearly impossible to project what our numbers will look like by year’s end," says Supan.

A big variable in this equation is the entrance of many new competitors in this field, both in the form of smaller startups and larger media companies getting into the game. In the meantime, YouTube has continued to maintain its position as the market leader, with growth that still laps the field even of its largest competitors. "YouTube is really the leader in this space. They have the largest market share in this category and have really show some of the biggest growth rates," says Prescott. During the three-month period cited by Hitwise earlier, YouTube’s growth in traffic was at 84%, whereas visits to Yahoo! were up only 16% and Google Video was flat.

Legal Questions
One potential roadblock to YouTube’s continued growth could arise if content owners demand the site removes clips that have been posted there without its permission. "Lazy Sunday," the Saturday Night Live bit that first brought YouTube to the attention of many last winter, was pulled at NBC’s request, though the site still hosts plenty of television clips that are clearly there without the owners’ permission, and some of that content is the site’s most popular.

Even more vexing would be if content owners started suing YouTube for damages based upon unauthorized posting of their work. The first such suit was filed this week by videojournalist Robert Tur, whose footage of the beating of Reginald Dennis during the 1992 Los Angeles riots was posted to the site without his authorization. Tur filed suit based on the 2005 Supreme Court ruling that held file-sharing services responsible for deliberately encouraging copyright violation. The journalist claims that his clip was viewed more than 1,000 times in one week, and he’s seeking $150,000 per violation, according to the San Jose Mercury News.

YouTube’s Setbon said in a statement that the suit was without merit, as the site removed the clip as soon as Tur brought it to their attention.

And What About That Business Model?
YouTube took its first steps toward an ad-supported model early this year with text-based ads, then went further in July with a banner ad campaign for Disney movie Pirates of the Caribbean: Dead Man’s Chest. NBC also recently announced that it would begin promoting its fall television lineup on YouTube; in addition to Saturday Night Live, the network’s My Name Is Earl and The Office would seem to be perfect fits for the site.

But aside from the $11.5 million in backing it received from Sequoia Capital, YouTube is playing its financial cards close to the vest, though Supan acknowledges that some sort of ad-supported model forms the bulk of the company’s business plan.

"Over time, YouTube will have created a new model, just as Google created a new model for Web-based ads," she told the San Jose Mercury News earlier this week. "The path to profitability is in sight."

She acknowledged, however, that the site’s users are likely to balk at traditional pre-and post-roll ads. "We want to get it right," she told the newspaper. "It’s not just a matter of whether or not the advertiser will find value. It’s also whether the users find value in it."