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Digital Top Stories
Veoh set to close, blames Universal Music
By CMU Editorial | Published on Friday 12 February 2010
One of YouTube’s original competitors, US-based Veoh, is reportedly about to file for bankruptcy, having, according to the AllThingsD blog, laid off its entire staff. And, according to Billboard, one of the video sharing company’s board members has blamed Universal Music for Veoh’s demise.
Like YouTube, Veoh was originally designed as a user-generated content platform, but quickly became a user-stolen content website. Certain features of Veoh, in particular the fact it always allowed longer videos while YouTube initially restricted uploads to ten minutes, made it even more attractive to those who were busy sharing entire series of TV shows with the rest of the internet, without the permission of the TV shows’ owners, obviously.
Veoh also benefited when the rising profile of YouTube meant it, more than any other video sharing service of the time, faced legal threats from content owners, forcing them to crack down on unlicensed uploads. That meant that those uploading such content had to go elsewhere, and many went to Veoh.
So much so that Veoh started to face its own legal action from content owners. The most high profile was Universal Music’s lawsuit, which was finally ruled on in court last September. They accused Veoh of infringing their copyrights by allowing people to upload music videos owned by the major onto their system. Veoh argued they were not liable for any infringing content posted by third parties on their site because they removed that content as soon as they were made aware of it by copyright owners, in line with the rules set out in the US’s Digital Millennium Copyright Act.
Given Veoh had, by this point, got an effective take-down system in place, and with the US courts agreeing that under the DMCA simply responding to take-downs was sufficient for a content-sharing service provider to avoid liability for infringement, the video-sharing firm won the case. But, Veoh director Todd Dagres argued this week, the costs of fighting that lawsuit destroyed the company. He tweeted: “Veoh is dead. Universal Music lawsuit was the main killer. Veoh won resoundingly but was mortally wounded by the senseless suit”.
Of course, arguably, Veoh faltered as much because of its flawed business model as anything else. Once the take-down notices start to role in, forcing you to remove professionally made content, and because 98% of user-generated content is shit, you quite quickly find yourself owning a video platform with very little to offer other than free bandwidth to grass-roots content owners. And even if the content you have starts to generate traffic, your overall platform isn’t necessarily an attractive place for advertisers to be seen to be.
Unless you can make a business out of selling premium services for video makers, ie charging for quality hosting and streaming, you really need to do content licensing deals with the big music, movie and TV companies to build a business attractive to potential subscribers and advertisers. But such deals don’t come cheap – not yet anyway – meaning you need serious venture capital or someone as big as Google behind you to make it work. Google also brought to YouTube an established ad sales operation, and the ability to lump YouTube advertising in with the web giant’s other products and advertising options.
Veoh never had any of that. Like many other YouTube-clones – and to an extent YouTube itself – they thought that if they built the infrastructure for an internet-era TV network then content would sort itself out, ignoring the fact that all the original TV networks back in the mid-Twentieth Century were programme makers as well as broadcasters, pumping much more money into risky programme making than the technology that enabled that content to reach users’ homes.
Still, Universal’s lawsuit, and a similar earlier and also unsuccessful legal action from porn firm IO Group, can’t have helped as Veoh tried to work out its reason for being, and how it would ever make money.
