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Cuban: Only a 'moron' would buy YouTube

Fri, 09/29/2006 - 8:13am
CED Staff

It's safe to say that Dallas Mavericks owner and billionaire Mark Cuban is not much of a fan of YouTube, at least from a business point-of-view.

The popularity of the Internet video sharing service may be soaring, but only a "moron" would want to purchase it, Cuban told advertisers in New York this week, according to this story from Reuters.

Chiding YouTube for its historically lax attitude on copyright protection, Cuban predicted that the service would be "sued into oblivion."

"The only reason it hasn't been sued yet is because there is nobody with big money to sue," Cuban said, according to the report. MySpace, a YouTube rival of sorts that is backed by a deeper-pocketed News Corp., could be worth about $15 billion within three years, according to a recent forecast from RBC Capital Analyst Jordan Rohan.

YouTube, however, has started to blaze a path toward business legitimacy. In September, the company scored what was considered by some a landmark deal to distribute music videos from Warner Music Group Corp. In concert, YouTube revealed a new reporting platform that will support copyrights and help content providers authorize content and track royalties for work distributed via YouTube.

Cuban also blasted user-generated content on YouTube that probably wouldn't fall under the auspices of copyright.

"User-generated content is not going away," he said. "But do you want your advertising dollars spent on a video of Aunty Jenny watching her niece tap dance?" 

Advertisers, of course, will have to answer that question on their own. But recent studies are showing high usage of such services.

One such study from Parks Associates suggests that users of "social networking sites" such as MySpace continue to be big on video, with 55 percent viewing streaming videos and 21 percent downloading long-form videos on at least a monthly basis.

Those who visit such sites at least weekly are six times more likely to download long-form videos and 1.5 times more likely to view streaming video via the Internet than those who do not frequent those Web sites, the research firm noted.

"Whether the business model is free video streaming backed by advertisements or the sale of online movies and TV shows, social networking Web sites are well-positioned to become strong contenders in the Internet video business," said Yuanzhe (Michael) Cai, director of broadband and gaming at Parks Associates.

But these sites cannot live on video alone.

"On the other hand, online video Web sites, if they are to be competitive, need to beef up their social networking features to attract and retain users," he added.

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