Video-sharing websites have grown up a lot faster than the average internet property, including, in YouTube’s case, being bought for over $1bn in record time.

The need to scale to meet booming demand for bandwidth-hungry video, working out an advertising model and trying to placate rights holders have quickly emerged as major challenges.

YouTube made a smart decision in allowing itself to be acquired by Google, given the enormous resources it could tap into, says Matt Sanchez, one of three Yale graduates who founded online video service, VideoEgg, two years ago.

“The environment means video start-ups have to evolve at an extremely rapid pace,” he told us on a visit to our San Francisco bureau.

“When you think about the technical platform, that’s a team of 50 or 60, then advertising sales is another 40 to 50, then how you deal with digital rights management, that’s another 20 and you are 150 people before you know it.”

VideoEgg itself has grown from five to 50 people over the past year. Instead of being a destination site itself, it has focused on providing a video uploading service to more than 50 sites including leading social networking plays Bebo, Hi5, Tagged and Piczo.

It launched the Eggnetwork in October, an advertising network that is introducing ticker-style ads to encourage viewers to pause what they are watching and see targeted messages.

Sanchez is not surprised that YouTube failed to meet its deadline of implementing digital fingerprinting technology that would ease rights holders concerns about illegal use of their content.

He says the technology is still in its early days and VideoEgg itself would use a 3^rd party solution such as those offered by Auditude and Audible Magic.   

New video editing tools are coming this quarter as users become more demanding and professional about what they upload.

“The sophistication of users has increased exponentially over the past six months,” he says.

February 19th, 2007 in Digital media | Permalink