User-uploaded video might be making all the waves on the internet right now but the future lies in professional content, according to the head of one video portal.
"You can monetise professional content by running advertising but I think it will be quite difficult to add advertising to user-generated video," said Guba CEO Thomas McInerney. He also admitted it's difficult to police user-uploaded video to ensure none of it infringes copyright.
"What surprises me a little is that there is so much copyrighted content," he said. "I'm surprised competitors haven't been sued by the MPAA (Motion Picture Association of America) or one of the big players yet."
McInerney has just been dealing with these very issues.
His Guba site relied on user-uploaded content and video trawled from Usenet newsgroups - much of it protected by copyright - until June when it started offering movies from Warner Bros. In July it added movies from Sony. Users can either download the movies and own them outright or "rent" them for a 24-hour period, during which time they can watch them as many times as they like.
When the premium service began the movies were priced at up to $19.99 for download and up to $2.99 for rental, but Guba recently dropped those prices. It now charges no more than $9.99 to download and own titles and $0.99 to rent. The lower prices pushed sales up by a factor of ten, said McInerney.
Online video is one of the hottest areas on the internet right now. July marked the first month that a video-sharing website broke into the top 50 most popular sites, as ranked by Media Metrix. YouTube, entered the monthly chart at number 40 with 16 million visitors, a 20 per cent increase compared to June, the research company said.
Video is also pushing up visits to sites like MySpace.com and Yahoo. Last month Sony Pictures Entertainment acquired Grouper Networks, the privately held operator of the grouper.com video site, and MTV Networks International is about to launch a video site that brings together content from users, MTV and Nickelodeon.
"There is a fundamental shift happening. People are spending less time watching TV and going to the cinema. Studios are waking up and realising they need to get online," said McInerney of all the action around the sector.
Of his competitors he said: "Google is moving in our direction and iTunes as well, although iTunes doesn't have user-generated content and I don't think it will. YouTube is obviously very powerful but I can't help but think they will run into trouble with copyright."
In addition to the premium movies, Guba still offers content from users or Usenet newsgroups and has spun off its adult video section to a separate site.