Taking on YouTube, One Video at a Time

Veoh Networks Founder Says He Has the Platform Publishers, Advertisers Will Want

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NEW YORK (Adage.com) -- The Michael Eisner-backed Veoh Networks has officially launched today, after more than a year in beta mode, complete with a new logo, a revenue-sharing model for original-content creators, a service that lets video producers check out their traffic across a host of video-sharing sites and a recommendation feature that suggests videos based on previous viewing preferences.
Dmitry Shapiro
Dmitry Shapiro

It already has a deal with United Talent Agency and another to host a branded video channel for Wenner's celebrity mag Us Weekly. What it doesn't have at launch is an audience like YouTube's. But Veoh CEO Dmitry Shapiro insists his site's ability to show DVD-like content and its peer-to-peer technology, which can scale much better than the Google-owned video-sharing site, will win out.

He chatted with Ad Age Digital about the long beta gestation and how advertisers can work with Veoh Networks.

Ad Age Digital: You've spent a lot of time in beta. What have you learned during that time?

Dmitry Shapiro: The video publishers span the range from complete amateurs in their homes to professionals in their motion-picture studios. ... YouTube is seen as the leader in the space, but to the publisher, that's not the service they prefer to use. They use it because they have to -- it's where most of the people are and they need to be there. But they're looking for better infrastructure to host their videos. ...

We've learned consumers want not only streaming video but also to be able to keep the videos. They often watch these videos at odd times, when they're not connected to a network -- on their video iPod or on a plane. ... We've learned there are lots of early adopters connecting the internet to their TVs, and remote compatibility is big because they don't want to get up off their butts to change video. ... We predicted, and it's true, that Madison Avenue is slow coming to nontraditional, user-generated content because of the way their buyers buy. But everyone understands this is a big opportunity.

Ad Age Digital: You're launching with Dr Pepper as an advertiser. Yet advertisers are nervous about being next to questionable user-generated content. Have you solved that problem?

Mr. Shapiro: The "being next to stuff" [excuse] I always find silly. ... On the web you're next to everything. I understand what people mean by being next to, but I guess I just don't believe it. Look at "Fear Factor." Their advertisers know they're going to be next to pretty nasty stuff, but they're still buying ads in it. Veoh tries hard to make sure it's not overly violent, overly sexual. But at the same time, it's free speech, the free world. ... And advertisers understand users know the difference between the video and the ad.

Ad Age Digital: You have previously said you're placing big bets on internet TV. Why?

Mr. Shapiro: The holy grail of internet advertising lies with internet TV. It's TV advertising at extreme targeting and real-time reporting. I can't imagine a medium that's more compelling to advertisers than internet TV. You get all the richness of TV with all the performance and trackability of the web. You'll see a giant amount of money flowing into internet TV as advertisers start to understand what it is and start to experiment.

Ad Age Digital: But consumer use of this stuff isn't totally there yet. You've also said, "It will take many players, working together, to make internet television as ubiquitous as television is today." Who are those other players?

Mr. Shapiro: It's computer manufacturers shipping their PCs with remote controls. The new Vista operating system has media center capability built in. All Apple operating systems have something called Front Row that comes with a remote. There are several black-box, set-top-box manufacturers doing this. There's Apple's iTV product that connects wirelessly. And companies like Veoh provide the application and the logic behind it. TiVo is starting to embrace internet video. AMD has a new set-top-box offering that Veoh has recently integrated with. Intel is creating its Viiv product with better processing to better render video. Media Center computers need to act more like [consumer electronics] devices than computers. And producers are starting to understand the format of internet TV is more flexible. You can split things up, create navigation that's nonlinear. All these people working together create internet TV.

Ad Age Digital: You're also a big believer in a concept that has previously been a dirty word: P-to-P. Talk to me about peer-to-peer networks and your belief that it scales better.

Mr. Shapiro: If you're delivering short, grainy videos, like YouTube [does], those videos are relatively small compared to delivering full-screen, high-res, long videos. So if you want to deliver a 1 1/2-hour indie film or a 30-minute TV show ... the file sizes are over a hundred times larger than the file sizes of the things YouTube delivers. And YouTube has been widely reported to be spending over $1 million a month to deliver its video. Multiply that times 100. That's not a scaleable business.

Veoh has this P-to-P infrastructure that lets us dramatically reduce the costs of delivering those very large files. We can deliver better quality and longer files than YouTube for less of the cost of YouTube. That's profound, when the game changes.

We very much believe in independent content -- we're not out there focused on studios and TV networks. But those producers should have their work showcased in high-res, full-screen rather than grainy videos.
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