Speaker 1: Technology with tech Stuff from works dot com. Hey there,
Speaker 1: and welcome to text Stuff. I am your host, Jonathan Strickland,
Speaker 1: executive producer, here at how Stuff Works, and today I
Speaker 1: thought we'd take a look at one of the most
Speaker 1: influential sites on the Internet. In fact, it's the second
Speaker 1: largest search engine on the Web. And if you haven't
Speaker 1: looked at the title of this episode, you might be
Speaker 1: thinking I'm talking about Yahoo or something, but nope, I'm
Speaker 1: talking about YouTube. It's a site that has recently been
Speaker 1: in the spotlight for lots of not so great reasons,
Speaker 1: but we'll get into those a bit later. And I
Speaker 1: should mention this is part one of a multipart episode,
Speaker 1: and as of the recording, I'm not exactly sure how
Speaker 1: many episodes this is going to end up being in total,
Speaker 1: but I suspect it will be too. I'll let you
Speaker 1: know more in our next episode after I've those notes done.
Speaker 1: But today, YouTube is the dominant player in online video content.
Speaker 1: Users watch, share, and upload hours of videos every moment,
Speaker 1: So we're gonna take a look at how YouTube got
Speaker 1: it start, how it rose to prominence, and some of
Speaker 1: the stories and scandals that have shaped it along the way.
Speaker 1: So let's start at the very beginning, which I am
Speaker 1: told through song is a very good place to start,
Speaker 1: and that would be at PayPal. Now. PayPal, to back
Speaker 1: up even further, was founded partially by two other companies.
Speaker 1: Peter Thiel, Ken Howary Luke Nozack and Max Levchin created
Speaker 1: a service called Confinity. Like today's PayPal, this was a
Speaker 1: money transferring platform, and in two thousand, Confinity merged with
Speaker 1: an online banking site called x dot com, which was
Speaker 1: co created by Elon Musk. So already we've got some
Speaker 1: really big names involved in this story, namely Peter Thiel
Speaker 1: and Elon Musk. Really, the news service became known as
Speaker 1: PayPal shortly thereafter, and by two thousand two had attracted
Speaker 1: attention from a little company called eBay. eBay moved to
Speaker 1: a choir PayPal for the princely sum of one and
Speaker 1: a half billion with a B dollars. Now, this acquisition
Speaker 1: made a lot of people really rich. Or let's get
Speaker 1: real here for a second. People, it made some people
Speaker 1: rich and other people it made way more rich than
Speaker 1: they already were. Because I hate to tell you this,
Speaker 1: but the fairy tale of the developer who comes from
Speaker 1: nothing and then becomes a millionaire isn't nearly as common
Speaker 1: as we would all like to think. Often it's more
Speaker 1: like rich person goes and does things and gets more rich.
Speaker 1: But that's a topic for another show on another podcast.
Speaker 1: Really now, two former employees of PayPal, Chad Hurley and
Speaker 1: Steve Chen, were shooting the breeze at Chen's then new
Speaker 1: San Francisco home, and I like to imagine they were
Speaker 1: having money fights with each other, throwing balls of cash around.
Speaker 1: That's probably not accurate. They did shoot some video while
Speaker 1: they were hanging out, and then they lamented that sharing
Speaker 1: video online was unreasonably hard. The Internet and the Web
Speaker 1: had started to transform everything, but it was still difficult
Speaker 1: to get video to anyone. This is the era before
Speaker 1: the smartphone, so for one thing, we didn't all have
Speaker 1: video cameras in our pockets. And it was the era
Speaker 1: before anyone had created a really dependable platform upon which
Speaker 1: you could upload and share video that could get a
Speaker 1: lot of traction. Meanwhile, there was a third former PayPal
Speaker 1: employee named Jawed Catam who was lamenting that there was
Speaker 1: no easy way to find videos of specific events online.
Speaker 1: He was thinking about some events that had really made
Speaker 1: the news and you should be able to find video
Speaker 1: of those events online, But unlike other sources on the
Speaker 1: other types of media, there was no really good way
Speaker 1: of searching for video. So you could find news reports
Speaker 1: or sometimes images, but you couldn't necessarily find video clips. Now,
Speaker 1: there were two events in particular that he cites as
Speaker 1: being sort of the inspiration for thinking about this, and
Speaker 1: one of them is is a catastrophe, and the other
Speaker 1: one not as much, although it was treated as a
Speaker 1: catastrophe at the time. So the two events he cited
Speaker 1: in an interview in two thousand six were the moment
Speaker 1: during the halftime show of the two thousand four Super Bowl.
Speaker 1: That moment the moment in which Janet Jackson's breast was
Speaker 1: exposed during what was later called a wardrobe malfunction. So
Speaker 1: that was the first event he cited as one of
Speaker 1: the reasons he wanted to create a platform that would
Speaker 1: be easier to share video because he couldn't find video
Speaker 1: of that event. And the other was a tsunami that
Speaker 1: had devastated places like Indonesia, Sri Lanka, Thailand, and India,
Speaker 1: and he knew that there were a lot of people
Speaker 1: who had captured video footage of the tsunami and that
Speaker 1: video footage could be really valuable for people and educational
Speaker 1: for people, but there was no easy way to search
Speaker 1: for it. You couldn't find it anywhere. And he knew
Speaker 1: that there were other events like this, but again there
Speaker 1: was no way to find them. So he would end
Speaker 1: up having a meeting with Chen and Hurley, the two
Speaker 1: guys I mentioned earlier, and talk about this problem, and
Speaker 1: they were all kind of going over this same issue. Now.
Speaker 1: There was no platform at that time where you could
Speaker 1: easily upload a video and other people could go there
Speaker 1: to watch it that really gained traction. There were a
Speaker 1: lot of little sites, but no one had really come
Speaker 1: to the forefront. When it came to video online, your
Speaker 1: options were pretty much limited. You might host a file
Speaker 1: on a server and people could visit a website and
Speaker 1: download the file to their own machine. That's not terribly
Speaker 1: user friendly and it took a long time and still
Speaker 1: let's somehow. That's how some of the earliest web series
Speaker 1: like Red Versus Blue from Rooster Teeth distributed their content
Speaker 1: in the early days, is that you would actually pop
Speaker 1: onto their site, download a file when it became available,
Speaker 1: and then on your computer at home you would launched
Speaker 1: the video in a video player program that was compatible
Speaker 1: with whatever file format the content creator was using. It's
Speaker 1: not the smoothest experience. You can also create a web
Speaker 1: based video player using one of several different proprietary formats,
Speaker 1: which just made things more confusing. Microsoft had Active Movie,
Speaker 1: which was a media player that launched in Nix and
Speaker 1: allowed streaming media. Real Player had launched their application the
Speaker 1: following year in and Apple would follow suit in n
Speaker 1: with quick Time four and their streaming media format, So
Speaker 1: there were a few solutions out there if you wanted
Speaker 1: to host streaming video on a site, but it was
Speaker 1: still not the greatest experience in the world from a
Speaker 1: user perspective because most people were relying upon dial up modems,
Speaker 1: so it was really slow to access anything. They had
Speaker 1: to download whatever the applicable movie playing program was and
Speaker 1: have that stored on their machine, and streaming video was
Speaker 1: just hard to do without all those annoying buffering issues.
Speaker 1: So still not very great now. Those solutions also, again
Speaker 1: we're not entirely based on the web. You had to
Speaker 1: have that program, so first you have to go and
Speaker 1: download your Active movie player, and then you would have
Speaker 1: to access the website that actually has the streaming content
Speaker 1: on it, and if you went to a different site
Speaker 1: that had say quick Time for streaming content on it,
Speaker 1: you would have to get a totally different later because
Speaker 1: they were incompatible formats. This proprietary approach was fragmenting the
Speaker 1: experience and that's never really satisfying from a user perspective.
Speaker 1: In two thousand two, Adobes Flash product came along, and
Speaker 1: that simplified things because people began to adopt that as
Speaker 1: this standard for streaming technology at the time. And a
Speaker 1: couple of years later, more people had access to broadband speeds,
Speaker 1: making streaming video a viable option that didn't always include
Speaker 1: ages of buffering time. So you had sort of this
Speaker 1: convergence of different events that were making it easier to
Speaker 1: have a streaming video service. You had Flash coming about,
Speaker 1: which gave a lot more versatility to streaming video, and
Speaker 1: you had the fact that more than half of American
Speaker 1: households had access to what was then considered broadband speeds,
Speaker 1: which was much lower than what we consider broadband today.
Speaker 1: So in early two thousand five things were kind of
Speaker 1: falling into place. It was the right time to look
Speaker 1: into creating a platform in which users could upload video
Speaker 1: footage and watch other video clips. It would become parts
Speaker 1: social platform, parts search engine, and the three felt they
Speaker 1: were onto something and began to have some serious discussions
Speaker 1: about what it would take to launch such a platform.
Speaker 1: So who are these guys? Well, Steve Chen was born
Speaker 1: in nineteen seventy eight in Taipei, Taiwan. His family moved
Speaker 1: to Chicago, Illinois, when Chen was fifteen years old. He
Speaker 1: attended the University of Illinois Champagne, Urbana. This was a
Speaker 1: school that had some pretty notable alumni, particularly in the
Speaker 1: field of computer science. For example Mark Andreson, who would
Speaker 1: go on to co create the first commercially successful web browser, Mosaic.
Speaker 1: He went there. Chen was interested in coding and graduated
Speaker 1: from the university and moved on to work for PayPal,
Speaker 1: and he would end up meeting Chad Hurley on his
Speaker 1: first day on the job. Hurley was born in nineteen
Speaker 1: seventy seven in Birdsboro, Pennsylvania. He studied fine art at
Speaker 1: the University of Pennsylvania, and he leveraged his artistic abilities
Speaker 1: to help design user interfaces and join PayPal to work
Speaker 1: on its UI. And that's really important. We often will
Speaker 1: not really consider how challenging it is to create a
Speaker 1: user interface that is clear. It gives the user very
Speaker 1: uh simple instructions on how to use the service, and
Speaker 1: there's not a lot of clutter there. It's actually a
Speaker 1: lot more challenging to do than you would think. And
Speaker 1: so Hurley came from this from a fine arts perspective,
Speaker 1: which is pretty interesting to me. Jawad Karnem was born
Speaker 1: in nineteen seventy nine and East Germany and his family
Speaker 1: moved to West Germany in nineteen eighty, which was a
Speaker 1: thing back then because there used to be an East
Speaker 1: and West Germany. I remember those His parents were scientists
Speaker 1: and researchers. They moved to the United States in nineteen
Speaker 1: Kareem would attend the University of Illinois along with Chen,
Speaker 1: although he didn't actually meet Chen while attending the school,
Speaker 1: and he dropped out before graduating in order to go
Speaker 1: work at PayPal. Now, according to the sources I research,
Speaker 1: Kareem didn't meet up with Chen until they were both
Speaker 1: at that company, until they were both at PayPal, though
Speaker 1: they again did attend the same university. Kareem would later
Speaker 1: leave YouTube and finish his studies first, though he would
Speaker 1: graduate in two thousand and four with his undergraduate degree.
Speaker 1: He would leave YouTube later on and pursue post graduate degrees,
Speaker 1: and early on he was frequently left out of stories
Speaker 1: about YouTube's rise to success, though that was later rectified.
Speaker 1: And I'll talk a little bit about why he was
Speaker 1: kind of written out of the history and just a
Speaker 1: little bit. Oh and uh. Like I said, YouTube wasn't
Speaker 1: their first go at a video platform service. There was
Speaker 1: an earlier failed concept that I think I should address.
Speaker 1: The original video platform concept before they settled on YouTube
Speaker 1: was one that Chen Hurley and Kaream called tune In
Speaker 1: hook Up and yes, it was meant to be a
Speaker 1: dating website. Users were supposed to post videos of themselves
Speaker 1: and Peru's other videos, all in the name of finding
Speaker 1: a certain special someone with whom you could then hook up.
Speaker 1: According to Kareem in an interview in two thousand sixteen,
Speaker 1: the founders even trolled through Craigslist personal ads and offered
Speaker 1: women twenty dollars to upload videos of themselves to this
Speaker 1: service in order to populate it, but they found zero takers. Anyway,
Speaker 1: that particular startup fizzled, but the three founders saw possibilities
Speaker 1: in using the video platform technology a different way, And
Speaker 1: on February two thousand five Valentine's Day, which Kareem would
Speaker 1: later say was to a coder, just a normal day,
Speaker 1: which I think is just a sly remark on the
Speaker 1: personal lives of your typical coders, the team pivoted away
Speaker 1: from this concept of tune in hook up and they
Speaker 1: pivoted toward YouTube. Hurley registered the trademark for the logo
Speaker 1: and the domain of the site on that day. Their
Speaker 1: new platform would be one where people could upload videos
Speaker 1: about whatever subjects they like within reason, and I wouldn't
Speaker 1: have a narrow focus on dating like their original concept,
Speaker 1: but rather serve as a general video publication and consumption site.
Speaker 1: But would it work well? They weren't sure. Chinn and
Speaker 1: Kareem were focused on creating the technical platform for the service,
Speaker 1: while Hurley concentrated on the user interface and the logo
Speaker 1: design for the site. The team built out the infrastructure
Speaker 1: for the service, and the first video to officially hit
Speaker 1: YouTube would not go up until April two thousand five. Now,
Speaker 1: I'm sure a lot of you already know the name
Speaker 1: of that video because it is a piece of Internet history,
Speaker 1: But just in case you don't and you some pub
Speaker 1: trivia knowledge in your back pocket. The title of the
Speaker 1: very first video upload to YouTube was Me at the
Speaker 1: Zoo and it's a video of Jawad Kareem standing in
Speaker 1: front of an elephant enclosure at the San Diego Zoo
Speaker 1: and it published on April two thousand five. As of
Speaker 1: the recording of this podcast, it has accumulated more than
Speaker 1: forty four million, five hundred thousand views. It lasts eighteen
Speaker 1: seconds long and contains the important information that elephants are
Speaker 1: really cool because they have really long trunks. And while
Speaker 1: I'm poking some fun at the content of the video,
Speaker 1: the important thing was it was a piece of content
Speaker 1: that could be tested out on the platform itself. What
Speaker 1: was in the video wasn't nearly as important as the
Speaker 1: fact that this was the first video to go live
Speaker 1: on an official YouTube server it would ultimately face the public.
Speaker 1: This wasn't just some random test video on a server
Speaker 1: that was never going to be forward facing and only
Speaker 1: be used by developers. This was the first actual YouTube video,
Speaker 1: and that is why it is significant. Now. I have
Speaker 1: a lot more to say about YouTube in those early days,
Speaker 1: but before I get into that, let's take a quick
Speaker 1: break to thank our sponsor. All right, it's two thousand
Speaker 1: five April. YouTube still was not yet open for the public. Essentially,
Speaker 1: in late April early May two five, the company launched
Speaker 1: its beta home page. They had secured a deal with
Speaker 1: an internet service provider called Server Server Beach, and the
Speaker 1: deal was for an unlimited data plan for a hundred
Speaker 1: and twenty nine dollars a month. The earliest incarnation of
Speaker 1: YouTube wasn't exactly a home run. Kareem said that their
Speaker 1: original version of the site didn't let users select which
Speaker 1: videos to watch. Imagine that going to YouTube, but you
Speaker 1: have no control over what video is going to play. Instead,
Speaker 1: it was a Russian roulette style of experience. You'd go
Speaker 1: to the site and it would randomly serve up one
Speaker 1: of the videos stored on its servers. And because there
Speaker 1: were relatively few videos available and meant you were likely
Speaker 1: to see a lot of the same stuff, it wasn't
Speaker 1: the sort of experience that would lead people to coming
Speaker 1: back for more. And in fact, Karim himself had gone
Speaker 1: to airports and filmed planes landing and taking off just
Speaker 1: to have more content to throw into the servers, because
Speaker 1: otherwise you didn't really have anything to populate them, and
Speaker 1: that is obviously any that's a problem any user generated
Speaker 1: platform is going to face. You don't have a lot
Speaker 1: of content until you have users to generate that content.
Speaker 1: But how do you attract the users in the first place.
Speaker 1: It could have been the very end of YouTube at
Speaker 1: that very beginning, because they had to get enough people
Speaker 1: in there to create content to to alter the user
Speaker 1: interface of this approach, and the founders were still sussing
Speaker 1: out what YouTube was supposed to be because besides the
Speaker 1: dating site idea they had already abandoned, they thought perhaps
Speaker 1: that YouTube would be a place where you'd have relatively
Speaker 1: small circles of friends and you would share videos between
Speaker 1: the folks in that circle. In other words, the YouTube
Speaker 1: founders had a vision for their service kind of similar
Speaker 1: to what Twitter founders thought their users were going to want,
Speaker 1: And it turns out that both groups weren't quite on target.
Speaker 1: While they thought this is a place where you could
Speaker 1: share videos with your close friends and family, what they
Speaker 1: saw was that people wanted to share to the rest
Speaker 1: of the world. It was a much grander scale than
Speaker 1: they had anticipated. The site was still struggling to find
Speaker 1: its place when on July four, two thousand five, Kareem
Speaker 1: attended a Faithful Independence Day barbecue party and it was
Speaker 1: hosted by a guy named Mike Greenfield. Greenfield had been
Speaker 1: another PayPal employee back in the day. Also in attendance
Speaker 1: of that already was a guy named Keith Rabboi or
Speaker 1: Reboi I guess it would be the French pronunciation. He
Speaker 1: had another PayPal employee. He had been an executive with PayPal,
Speaker 1: and Reboi and Kareem got into a conversation about YouTube,
Speaker 1: and Kareem was convinced to show off YouTube by plopping
Speaker 1: down in Greenfield's bedroom and using Greenfield's personal computer to
Speaker 1: check out all the videos on YouTube. They literally sat
Speaker 1: down and watched all of them. Jawed, Kareem and Uh
Speaker 1: and Keith Reboi, So, Keithan and Jared are sitting there
Speaker 1: there watching every single video that's on YouTube these days,
Speaker 1: If you tried that, you would never finish watching it.
Speaker 1: There would just be too much content there. You would
Speaker 1: die of old age before you got through it all.
Speaker 1: But back then, on July four, two thousand five, the
Speaker 1: entirety of all the content on YouTube consisted of about
Speaker 1: thirty minutes worth of videos. Many of them were playing
Speaker 1: is taking Off and Landing Now. Despite the lack of
Speaker 1: compelling content, Keith saw the potential in YouTube and offered
Speaker 1: to become an investor on the spot. And according to him,
Speaker 1: the only other time he ever felt compelled to make
Speaker 1: an investment that quickly was when he first heard about
Speaker 1: the concept of Airbnb. Kareem was getting ready to leave
Speaker 1: YouTube in order to pursue a PhD program at Stanford.
Speaker 1: He would continue to serve as a consultant for YouTube
Speaker 1: while he was going off to pursue his studies. Meanwhile,
Speaker 1: Keith Reboise showed off YouTube to Yeah, another former PayPal employee,
Speaker 1: this one named roll Off. Both of both had actually
Speaker 1: worked as the chief financial officer of PayPal, so you
Speaker 1: may notice this is a bunch of former PayPal folks
Speaker 1: who were all kind of coalescing around this YouTube concept,
Speaker 1: and in fact, without PayPal, YouTube never would have existed.
Speaker 1: In the summer of two thousand five, Botho was working
Speaker 1: at an investment firm called Sequoia cap at All and
Speaker 1: both was able to help secure an initial investment in
Speaker 1: YouTube through Sequoia. Now they get those investments going, they
Speaker 1: had to change the narrative a bit of YouTube and
Speaker 1: had it focused solely on Chen and Hurley and kind
Speaker 1: of write Kareem out of the picture because Kareem, who
Speaker 1: had left to continue his studies, was creating kind of
Speaker 1: a problem. Not on purpose, it's just because of his absence.
Speaker 1: The justification was that it would be really challenging to
Speaker 1: pitch a company to potential investors if part of the
Speaker 1: story was that one of the three founders had recently
Speaker 1: left the company. They made YouTube sound less stable, so
Speaker 1: they sort of erased Kareem from the history of YouTube
Speaker 1: for the time being. He would eventually get written back
Speaker 1: into that history, and he also would not complete his
Speaker 1: postgraduate work. He never earned that PhD from Stanford. He
Speaker 1: did earn a master's degree, and he did with Tame
Speaker 1: Shares of YouTube, which softens the sting of not getting
Speaker 1: that doctor in a little bit. Now. Both have created
Speaker 1: a memo and presentation arguing for the investment into YouTube
Speaker 1: for Sequoia Capital. His investment plan was to supply one
Speaker 1: million dollars initially, followed by a four million dollars Series
Speaker 1: A funding and in return, Sequoia Capital would get at
Speaker 1: stake in YouTube once it emerged from Series A funding. Now,
Speaker 1: the actual details of the funding deal once it was
Speaker 1: concluded are a bit clouded in secrecy, but a lot
Speaker 1: of the sites I research suggested the initial investment was
Speaker 1: more like half a million dollars, with another three million
Speaker 1: dollars investment in Series A funding in November two thousand five,
Speaker 1: for a total of three and a half million dollars
Speaker 1: of that initial funding. But considering what happened to the
Speaker 1: site over the following years, any investment of around that
Speaker 1: size was more than worth it and more than paid
Speaker 1: for itself. When you talk about big gets, this one
Speaker 1: definitely counts now. Just to backtrack a bit, in September
Speaker 1: two thousand five, YouTube hit a milestone. The site had
Speaker 1: its first video to hit one million views. This video
Speaker 1: was an advertisement for Nike, and it started Brazilian soccer
Speaker 1: player or football player if you prefer, named Ronald Dino.
Speaker 1: He puts on a new pair of Nikes and then
Speaker 1: he shows off some truly impressive ball juggling skills with
Speaker 1: his feet before kicking the ball precisely so it hits
Speaker 1: the goals crossbar and bounces back to him. He's standing
Speaker 1: many yards away from the goal. It's actually really impressive
Speaker 1: to me that he is so precise with his kicks.
Speaker 1: He's juggling the ball, kicks it while it's coming down,
Speaker 1: It hits the crossbar, bounces right back to him. He
Speaker 1: starts juggling the ball again, does this a few more
Speaker 1: times in a row consistently. The video itself is about
Speaker 1: two minutes forty five seconds long, and I came to
Speaker 1: the realization that I will never do anything in my
Speaker 1: life as well as that man was able to juggle
Speaker 1: and kick a soccer ball. You could also argue that
Speaker 1: this was the first viral video on YouTube. It was
Speaker 1: an advertisement and it got more than a million views.
Speaker 1: It was pretty much a breakaway success in those early days.
Speaker 1: Also in September two thousand five, Julie Supan left the
Speaker 1: Best Buy Corporation to join YouTube as the head of
Speaker 1: marketing for the company. Now with the founders, she brainstormed
Speaker 1: the position YouTube wanted to take to the public, like
Speaker 1: what were they going to portray themselves as? What was
Speaker 1: their mission statement? And they decided that YouTube was going
Speaker 1: to become a broadcast medium for average people. This is
Speaker 1: all according to a piece that was written in mash
Speaker 1: Double a few years ago. One thing that set YouTube
Speaker 1: apart from many other sites was that they were deciding
Speaker 1: to to convert video files into a standard format. See
Speaker 1: a lot of other video sites, you had to actually
Speaker 1: have a specific format before you could upload it. YouTube
Speaker 1: would allow users to upload videos in different formats, and
Speaker 1: then the site would take care of converting those formats
Speaker 1: into flash, which removed that pressure from the user to
Speaker 1: make sure the video file they were sending met some
Speaker 1: specific criteria. There was a limit to how long a
Speaker 1: video could be, but the file format didn't matter as much.
Speaker 1: And when you remove that barrier, it made YouTube much
Speaker 1: more user friendly and helped attract more traffic. Imagine that
Speaker 1: you've shot a video and you want to upload it
Speaker 1: to a service, but then you find out that you
Speaker 1: have to use a completely different format. You would have
Speaker 1: to convert the file, or maybe look for a different service,
Speaker 1: or even reshoot your footage and put it into a
Speaker 1: new file format. Before you could do that, YouTube said no, no, no,
Speaker 1: We'll take whatever format you want to create your videos
Speaker 1: in and that will do the change on our side
Speaker 1: and post it to our flash based media player. Around
Speaker 1: the same time, YouTube users were really starting to push
Speaker 1: the platform's capabilities According to Time magazine, it was in
Speaker 1: November two thousand five when the company first started seeing
Speaker 1: data transfers of around eight terabytes of size every single day.
Speaker 1: That unlimited data of land wasn't part of the picture anymore,
Speaker 1: and so I was starting to get expensive to operate
Speaker 1: the business. To pay for those bandwidth costs, the company
Speaker 1: had to invest in engineers to build out the site.
Speaker 1: They needed servers to hold all that video content, and
Speaker 1: they needed data service plans to cover the cost of
Speaker 1: the massive amounts of traffic that was hitting the site
Speaker 1: every day. And at the time YouTube didn't really have
Speaker 1: any monetization plans. It was clearly an up and coming service,
Speaker 1: but it was operating at a loss. The company headquarters
Speaker 1: weren't much to write home about either. For a while,
Speaker 1: they were operating out of Sequoia Capital's headquarters, but the
Speaker 1: company soon relocated to San Mateo, California, and they moved
Speaker 1: into a space that was a of a pizzeria, specifically
Speaker 1: Amichi's East Coast Pizzeria, and according to a YouTube designer
Speaker 1: named Christina Broadbeck, the building had a real rat infestation problem.
Speaker 1: She said the rats were cats sized, which I think
Speaker 1: puts them in the category of r O U s S.
Speaker 1: All of this was happening while the site was still
Speaker 1: technically in beta. YouTube didn't emerge from this beta phase
Speaker 1: until December fifteen, two thousand five. The site had used
Speaker 1: investment money to increase the number of servers and to
Speaker 1: improve bandwidth service to make sure using the site was
Speaker 1: a positive experience, and over the next several months, the
Speaker 1: site continued to gain users and videos. In February two
Speaker 1: thousand six, videos on the site we're getting fifteen million
Speaker 1: views per day, with about twenty thousand new videos being
Speaker 1: added every single day. Now it grew not only in
Speaker 1: content but an employee count. It also began to encounter
Speaker 1: the first instance of intellectual property headaches for the service.
Speaker 1: In February two thousand six, YouTube receive a request from
Speaker 1: the American Broadcast Network in BC. NBC employees saw that
Speaker 1: a clip from Saturday Night Live called Lazy Sunday was
Speaker 1: up on YouTube. This was part of SNL's digital short
Speaker 1: series with Andy Sandberg and Chris Parnell. Lazy Sunday had
Speaker 1: racked up more than one point two million views NBC
Speaker 1: one of the clip taken down, along with around five
Speaker 1: other clips containing NBC content mostly from Saturday Night Live,
Speaker 1: and YouTube would comply with the request, But later in
Speaker 1: June two thousand six, NBC approached YouTube with a different request.
Speaker 1: The broadcast company formed a partnership with YouTube. In June
Speaker 1: two thousand six, NBC created a digital channel on YouTube,
Speaker 1: on which it would share clips of various shows, including
Speaker 1: special material made just for the YouTube channel. So why
Speaker 1: did they have a change of heart? Well, part of
Speaker 1: it might have had something to do with the fact
Speaker 1: that NBC had come in last place among the big
Speaker 1: four broadcast companies, the others being ABC, CBS and Fox.
Speaker 1: By June two thousand and six, YouTube boasted that people
Speaker 1: were watching approximately seventy million videos per day. That was
Speaker 1: a valuable audience. So NBC was hoping to convert those
Speaker 1: viewers into television viewers and to give them a little
Speaker 1: extra material to kind of bring them in and have
Speaker 1: them watch shows like The Office or Saturday Night Live.
Speaker 1: One month later, that seventy million videos per day was
Speaker 1: up to a hundred million videos per day. It seemed
Speaker 1: like YouTube was unstoppable. In between those two NBC communications
Speaker 1: came around of Series B funding, another venture capital fundraising series,
Speaker 1: this time YouTube raised about eight million dollars from Sequoia,
Speaker 1: and a video that would end up becoming the first
Speaker 1: true mega hit on YouTube went online in that month
Speaker 1: as well. That video was from a guy named Judson Lately,
Speaker 1: and it was titled The Evolution of Dance. Now it's
Speaker 1: since been surpassed. It's no longer the most watched video
Speaker 1: of all time, but for a while it reigned supreme
Speaker 1: with more than a hundred million views. I got a
Speaker 1: lot more to say about those early days with YouTube,
Speaker 1: but before I jump into that, let's take another quick
Speaker 1: break to thank our sponsor. All right, back to June
Speaker 1: two thousand and six. Now, that was when one of
Speaker 1: the first successful web series on YouTube premiered, because this
Speaker 1: would become another hallmark of YouTube was not just the
Speaker 1: one off videos or the videos that would come from
Speaker 1: a single creator or a group of creators, but the
Speaker 1: actual web series where you would have an ongoing story.
Speaker 1: This series was called Lonely Girl fifteen, and when it launched,
Speaker 1: there was no indication that this was a scripted show
Speaker 1: with an actre is portraying a fictional character at the center. Instead,
Speaker 1: it appeared to be the genuine vlog or video diary
Speaker 1: of a young lady named Brie. Brie was actually an
Speaker 1: actress named Jessica Rose, and it all started off pretty
Speaker 1: grounded and believable, mundane, even just the day to day
Speaker 1: issues that a teenage lady is facing. But while it
Speaker 1: was getting popular, the ruse did not last long. In
Speaker 1: September two thousand six, just a few months after it launched,
Speaker 1: it became pretty widely known that Lonely Girl fifteen was
Speaker 1: a scripted show, that it was a performance and non
Speaker 1: actual vlog. Once the gig was up, the show took
Speaker 1: a turn for the totes crazy, with storylines involving weird
Speaker 1: cults and quote trait positive blood end quote. Now. I
Speaker 1: never got into the web series while it was on,
Speaker 1: so I can't really give you my own personal opinion
Speaker 1: about it. I was only tangentially aware that Lonely Girl
Speaker 1: fifteen was a thing at the time. I had heard
Speaker 1: about it, but never sought it out. In August two
Speaker 1: thousand six, YouTube launched a revenue generating strategy. They called
Speaker 1: it participatory video ads. They also introduced brand channels. This
Speaker 1: is similar to what NBC had launched earlier that summer.
Speaker 1: The ads would appear in the upper right corner of
Speaker 1: YouTube homepage in a prime spot for listed videos, and
Speaker 1: if you clicked on that video in that space, it
Speaker 1: would take users to sponsored content. Advertisers could link those
Speaker 1: videos to brand channels or two other clips on YouTube,
Speaker 1: and the site rolled out some features that made it
Speaker 1: easier to share links with other users, encouraging the spread
Speaker 1: of viral videos. The brand channels could feature brand specific
Speaker 1: logos and graphics, so each channel could be set apart
Speaker 1: from the YouTube standard as well as from each other.
Speaker 1: October was a really big month for YouTube, and two
Speaker 1: thousand and six, first the company partnered with CBS, adding
Speaker 1: to the sites growing influence. They had already had the
Speaker 1: deal with NBC, and now CBS was on board. YouTube
Speaker 1: also would launch a content i D tool, the first
Speaker 1: of its kind for YouTube. This was an automated program
Speaker 1: designed to detect material that could infringe upon copyrights, and
Speaker 1: it also partnered with a company called Audible Magic to
Speaker 1: develop a technology that could analyze and identify audio clips.
Speaker 1: That way, if you uploaded a popular song against a
Speaker 1: video that was just a static image, for example, YouTube
Speaker 1: could still detected automatically and take down the video in
Speaker 1: order to protect copyrights. This set the stage for an
Speaker 1: enormous turn of events in the history of YouTube. In
Speaker 1: October two thousand and six, Google made an offer that
Speaker 1: YouTube couldn't refuse. This was an acquisition valued at about
Speaker 1: one point six five billion dollars. YouTube employees would get
Speaker 1: shares of Google stock and become rich, or at least
Speaker 1: rich on paper. Well, that is, the ones who weren't
Speaker 1: already rich from all that filthy PayPal money they had
Speaker 1: received just a few years previous. And I say filthy
Speaker 1: totally tongue in cheek. It was completely legitimate money. It
Speaker 1: was just a whole lot of legitimate money. Now, according
Speaker 1: to legal briefs that were filed as part of a
Speaker 1: lawsuit that I'm going to talk about in just a moment,
Speaker 1: we know that Chad Hurley made about three hundred thirty
Speaker 1: four million dollars in Google stock due to this deal.
Speaker 1: Steve chen was at a slightly more modest three hundred
Speaker 1: one million dollars, and John Kareem, who had left the
Speaker 1: company to pursue an education, received the smallest payout of
Speaker 1: the three founders. His stocks were valued at somewhere around
Speaker 1: sixty six million dollars. Not a bad haul to be honest.
Speaker 1: Christina Broadbeck, whom I mentioned earlier as a YouTube designer,
Speaker 1: had shares were slightly more than nine million dollars, So
Speaker 1: it really paid off to be a YouTube employee in
Speaker 1: October two thousand six, and in all there were between
Speaker 1: fifty five and sixty five YouTube employees in total. That
Speaker 1: was it for a one point six five billion dollar acquisition.
Speaker 1: That's incredible. As for Google, it had already been pursuing
Speaker 1: a streaming video strategy of its own before it purchased YouTube.
Speaker 1: In fact, it was the second most popular video streaming
Speaker 1: service that was online by a distance second, but it
Speaker 1: was still second place. Now there were Google engineers who
Speaker 1: were genuinely baffled at YouTube success. Google's technology allowed for
Speaker 1: videos with much better resolution than YouTube, but the engineers
Speaker 1: had underestimated how appealing YouTube's automatic conversion process was to
Speaker 1: the average user. Because with Google's video service, you had
Speaker 1: to use a specific video codec and provide information about
Speaker 1: the technical details of the video of itself like its resolution.
Speaker 1: With YouTube, all of the work was done for you.
Speaker 1: You just had to upload the file and YouTube did
Speaker 1: the rest. And so users had mostly ignored Google's product,
Speaker 1: even though you could get higher quality video out of it,
Speaker 1: and they flocked to YouTube instead. Google saw the writing
Speaker 1: on the wall and thus made the move. Towards the
Speaker 1: end of October, YouTube removed about thirty thousand videos in
Speaker 1: an effort to respond to copyright infringement cases, and in November,
Speaker 1: YouTube signed a deal with the National Hockey League, which
Speaker 1: would become the first big sports deal in YouTube's history.
Speaker 1: By January two thousand seven, when YouTube was not even
Speaker 1: two years old, yet, the service was so popular that
Speaker 1: analysts estimated the traffic to YouTube was equivalent to what
Speaker 1: the entire Internet experienced back in two thousand so, in
Speaker 1: other words, YouTube required as much bandwidth to operate in
Speaker 1: two thousand seven as the entire Internet did seven years earlier.
Speaker 1: Of course, other services like Netflix would later follow suit
Speaker 1: with similar kind of mind blowing statistics. In March two
Speaker 1: thousand seven, YouTube became the target of a massive lawsuit,
Speaker 1: the one I alluded to earlier. The plaintiff was Viacom.
Speaker 1: This is the cable company that owned brands like Nickelodeon
Speaker 1: and MTV. The lawsuit was to the tune of one
Speaker 1: billion dollars in damages, and it all centered on Viacom's
Speaker 1: claim that YouTube and by extension, Google, had failed to
Speaker 1: act appropriately when it came to protecting intellectual property. Basically,
Speaker 1: the lawsuit argued that YouTube was allowing users to upload
Speaker 1: media that didn't belong to them, costing media companies millions
Speaker 1: of dollars of loss of revenues in the process. Now,
Speaker 1: this is a tricky situation for multiple reasons. For one,
Speaker 1: YouTube was on the receiving end of thousands of videos
Speaker 1: every day, so checking each one for evidence of copyright
Speaker 1: infringement was not easy. Specifically, it wasn't easy to you
Speaker 1: manually or not even possible manually, so you had to
Speaker 1: rely on automatic approaches, and algorithms could be tricked. You
Speaker 1: might have seen a YouTube video here or there on
Speaker 1: a popular television show, or a movie or music video
Speaker 1: or something along those lines, and noticed that everything seems
Speaker 1: to be flipped with like backwards writing and other clues.
Speaker 1: Now that could be an indication that the uploader made
Speaker 1: that flip with editing software in an attempt to fool
Speaker 1: any content recognition algorithms because they're looking for the reverse
Speaker 1: version of that. But it's also tricky because arguing that
Speaker 1: piracy results directly and lost revenues is impossible to prove.
Speaker 1: The argument seems to say, this person over here watched
Speaker 1: unauthorized copies of our content on YouTube, and they should
Speaker 1: have just purchased those copies. If the unauthorized copies didn't exist,
Speaker 1: then that person would have bought a legitimate copy. But
Speaker 1: here's the thing, it's impossible to prove that someone would
Speaker 1: actually follow through with that. Further, it's impossible to say
Speaker 1: that some of the people who saw the unauthorized copies
Speaker 1: didn't go out and buy legitimate copies of the content
Speaker 1: later on, or maybe they already owned a legitimate copy
Speaker 1: of the content, but they were using YouTube to access
Speaker 1: the content without getting their personal copy out from wherever
Speaker 1: they had stored it. So, in short, it's impossible to
Speaker 1: prove the extent to which piracy impacts revenue. To add
Speaker 1: to that, there were suspicions that people at YouTube, just
Speaker 1: before the acquisition with Google, started to boost YouTube's numbers
Speaker 1: by allowing this unauthorized material to be uploaded to the site.
Speaker 1: In other words, they were patting the value of the
Speaker 1: service by allowing some shady stuff to go on, and
Speaker 1: then once the site got acquired it was no longer
Speaker 1: their problem. That's a pretty cynical way of looking about it,
Speaker 1: but it was something that a lot of people were
Speaker 1: floating by at the time. YouTube, for its part, cited
Speaker 1: the Digital Millennium Copyright Act and claimed that the company
Speaker 1: had been following the rules set out by the d
Speaker 1: m c A. The lawsuit would stretch out over seven years,
Speaker 1: only concluding in two thousand fourteen when the parties settled
Speaker 1: out of court. This followed two different setbacks for Viacom.
Speaker 1: The first had happened in when Judge Louis Stanton ruled
Speaker 1: favorably mostly for Google. Viacom would appeal that decision. It
Speaker 1: was sent to a federal appeals court, but they sent
Speaker 1: it back down to a different court, a court that
Speaker 1: was once again presided over by Judge Stanton, the guy
Speaker 1: who had said that Google was mostly in the right
Speaker 1: back in and Stanton gave essentially the same ruling in.
Speaker 1: Then Viacom would appeal that decision, and that's when they
Speaker 1: two companies were scheduled to meet in fen before they
Speaker 1: reached this settlement, which was never made public, so we
Speaker 1: don't actually know what money changed hands in the process.
Speaker 1: Us The general opinion in the text sphere seemed to
Speaker 1: be that Viacom didn't really have much of a case.
Speaker 1: The d m c A offers up a concept called
Speaker 1: safe harbor. Safe harbor is a protection for services like
Speaker 1: YouTube and other platforms that allows users to contribute content
Speaker 1: to that platform. The basic idea is that if you
Speaker 1: have a platform and you let your users create the content,
Speaker 1: you are not responsible for the stuff other people upload
Speaker 1: to your platform because you didn't create that content. Your
Speaker 1: users didn't. You just gave them a space for them
Speaker 1: to put their stuff. In addition, YouTube had tools that
Speaker 1: would automatically seek out instances of copyright infringement, and the
Speaker 1: company provided processes through which intellectual property owners could post
Speaker 1: claims against material that they said infringed on their intellectual property.
Speaker 1: So those processes could be anything from redirecting monetization so
Speaker 1: in other words, someone else uploads a copy of a
Speaker 1: movie that you made, you could, as the owner of
Speaker 1: that intellectual property, choose to turn monetization off so they
Speaker 1: can't make any money off of it, or even redirect
Speaker 1: that monetization so any money they would have made goes
Speaker 1: to you, or you could actually demanded that video be
Speaker 1: removed and would be taken down off of YouTube. That
Speaker 1: tool by the way, has been the center of much
Speaker 1: debate and controversy, as over zealous content owners have abused
Speaker 1: it in the past, sometimes even using it to take
Speaker 1: down their own videos that they put up in an
Speaker 1: effort to protect their intellectual property. I'll chat about that
Speaker 1: more in the next episode. I'm sure now, even though
Speaker 1: we don't really know what happened with that, I think
Speaker 1: we could say that at least YouTube from outward appearances
Speaker 1: could claim that they were in all good faith pursuing
Speaker 1: the processes necessary to protect other people's intellectual property. Whether
Speaker 1: they were really doing that to their fullest extent, that's
Speaker 1: still a matter of debate. H I like to take
Speaker 1: people at their word. But the same time, I figure
Speaker 1: if I ran a company that was worth billions of dollars,
Speaker 1: I might claim that I was doing everything I could
Speaker 1: to be on the up and up and not worry
Speaker 1: so much about whether that was true. But I'm not
Speaker 1: in that position. If someone would like to put me
Speaker 1: in that position and test my moral fiber, I welcome it.
Speaker 1: Send your billion dollars to how stuff works care of
Speaker 1: Jonathan Strickland, And I cannot stress how important that last
Speaker 1: bid is, because if Josh gets his grubby hands on it,
Speaker 1: I'll never see it. All right, I'm gonna end this
Speaker 1: episode with a quick rundown of another feature that really
Speaker 1: transformed YouTube and opened up a world of opportunities for
Speaker 1: a select few individuals, particularly in the early days, and
Speaker 1: that is the YouTube Partner Program. This was YouTube strategy
Speaker 1: that made it possible for the average person to launch
Speaker 1: a channel and to monetize it. Now. Previously that was
Speaker 1: something only the brand channels could do big big media companies,
Speaker 1: But now it is possible for a person to become
Speaker 1: an Internet celebrity and act really make money off of it. Now.
Speaker 1: I've often mentioned to my friends who claim I'm Internet
Speaker 1: famous that that kind of fame is largely useless. First
Speaker 1: of all, I'm not really famous. Second, what little fame
Speaker 1: I do have, I can't leverage in any remotely useful way.
Speaker 1: I can't even get a good table at a restaurant
Speaker 1: with it. But YouTube's partner program gave a few folks
Speaker 1: the shot at making a living by creating online videos,
Speaker 1: and before long a small number of YouTubers began to
Speaker 1: earn decent some amounts of money, sometimes more than decent,
Speaker 1: like up to six figures a year making videos. We
Speaker 1: also started seeing more viral videos coming from people who
Speaker 1: could create a compelling share double video. There tons of
Speaker 1: examples of viral videos and YouTube's history, and we often
Speaker 1: saw some of those same people attempt, often unsuccessfully, to
Speaker 1: repeat that experience by creating more videos similar ones to
Speaker 1: the ones that got a big hit. And it became
Speaker 1: clear that hitting a home run with a viral video
Speaker 1: once it was not a guarantee that you'd ever end
Speaker 1: up with a sustainable business. Though if your video was
Speaker 1: popular enough, you could still make some decent cash off
Speaker 1: of a single shot. It might just take a while
Speaker 1: and be spread out over several years. And that brings
Speaker 1: us up to early two thousand seven. Obviously, we've got
Speaker 1: a lot more to talk about in the history of
Speaker 1: YouTube to bring us up to date, so in our
Speaker 1: next episode, we'll look at how YouTube has expanded in
Speaker 1: the last decade, as well as some of the controversies
Speaker 1: surrounding the company. Will explore the bizarre world of the
Speaker 1: YouTube kids app, which has had some truly David lynche
Speaker 1: In scale weirdness going on with it, and we'll also
Speaker 1: take a closer look at some of the battles between
Speaker 1: content creators and the various intellectual property claims that have
Speaker 1: happened over the past several years. Meanwhile, if you guys
Speaker 1: have suggestions for other topics I should cover here on
Speaker 1: tech Stuff, you should let me know about them. One
Speaker 1: way you can do that is sending me an email.
Speaker 1: The addresses tech Stuff at how stuff Works dot com,
Speaker 1: or you can drop me a line on Facebook or Twitter.
Speaker 1: The handle for the show at both of those is
Speaker 1: text Stuff HSW Remember on Wednesdays and Fridays, I record
Speaker 1: this show and I stream it live. If you want
Speaker 1: to see the show early and find out what's cool
Speaker 1: in tech, sometimes more than a week before everyone else does,
Speaker 1: just go to twitch dot tv slash tech Stuff. The
Speaker 1: schedules up there and you can join the chat room
Speaker 1: and chat with me and and watch as I make
Speaker 1: gooflem ups in between takes it happens. I hope you
Speaker 1: enjoyed this episode. I look forward to talking to you
Speaker 1: with more about YouTube and kind of exploring how that
Speaker 1: site has evolved ever since Google took possession of it,
Speaker 1: and uh, I look forward to hearing from you guys,
Speaker 1: finding out what you want me to talk about in
Speaker 1: the future. Remember, it can be any sort of topic.
Speaker 1: It can be a technology, could be a company, could
Speaker 1: be a personality in tech. Maybe there's someone you want
Speaker 1: me to interview on the show, or me to be there,
Speaker 1: someone you want as a guest host for an episode.
Speaker 1: Give me a shout and let me know and I
Speaker 1: will talk to you again. Release soon for more on
Speaker 1: this and thousands of other topics. Is it how staff
Speaker 1: works dot com