Michael Learmonth of Silicon Valley Insider has some great news for fans of Hulu, the online video site started by NBC and Fox to stream full episodes from their various properties.  In a post entitled "Hulu Beating CNN, Turner, Still A Fraction Of YouTube" Mr. Learmonth says...

Hulu, which didn't formally open for business until March, is now the 8th-largest video site in the U.S.

That's according to new stats from Nielsen, which reports that the JV between Fox and NBC racked racked up some  105 million video streams in July, up from 80 million streams in May.

He also provides this break down of the numbers...

I am a huge Hulu fan so let me get that out of the way first.

Having admitted that I don't think these numbers tell the whole story.  A couple things to consider...

1.  The report quotes "Total Streams" but doesn't give any indication of what that means.  This is important because Hulu streams largely entire TV shows with 4 or 5 ads embeded into each while all competitors above it tend to deal mostly in short clips with 1 ad at best.

2.  Hulu monetizes 100% of their streams while others who allow for user uploads don't get anywhere near that.  Youtube, for example, is reported to only monetize 3% of their total streams putting their number at 150,727 as compared to Hulu's 105,830.  Given that and Point #1 above I think it's very possible that Hulu is actually running more ads than YouTube on a monthly basis

So it looks like Hulu is actually turning into a success which is, in my opinion, as important as news on the web gets. 

You see, Hulu was an attempt by two major studios to actually do Internet Video  right.  Hulu offers full episodes that can be embeded, shared and e-mailed just like any other type of online video.  So positive numbers are a huge thing because they mean the idea of web video is starting to prove itself. 

The theory has always been that studios should put their video out there because it will generate more money in the long run.  But up until now that's all there's been, a theory.  Hulu's success could offer substantial proof of that theory which is a huge thing.

As the business model is proven successful we'll see other studios jumping in and allowing their video "out of the box" so to speak.  Once that starts we'll begin to see a world develop where people can view, share, mashup and whatever else without having to fear copyright violations or legal action.   

In many ways Hulu is pioneering a path that all media should follow into the new age.  Allowing widespread streaming so users can determine what they enjoy and then pointing them to purchase items when they want to take them off the computer.  It's a level corporate/user harmony that the music industry should be a jealous of at this point.

Techcrunch reports that Rocketboom, a pioneer in the online video space, has made a distribution deal with Sony worth somewhere in the seven figure range. 

I'm bullish about online video and while I've never been a fan of Rocketboom I understand why many people like it.  I do think it's gotten quite a bit better since host Joanne Colan came aboard.  That said, seven figures is a vast over valuation in my opinion.

This reminds me of a story that was covered by the LA Times a while back about a Youtube phenomenon named Fred.  Fred is a teenage kid pretending to be a hyper-active 6 year old while sporting an extremely high pitch voice.  His videos get, on average, somewhere in the area of 3 million views a piece. 

But given his audience is probably made up of 14 year old I think it's safe to assume many if not most of his viewers watch the show multiple times. 

His YouTube channel has about 364,000 subscribers which I think is a safe bet as far as how many unique viewers he actually has (its not unreasonable to think a 14 year old would watch something they like 10 or 12 times)

Now to put this in perspective, lets look at some population numbers.  The U.S. alone has about 53 Million kids between the ages of 5 and 13 according to the census bureau.  Of those kids, 71.9 % or 38.2 Million of them have Internet access according to InternetWorldStats.com.  So even if we assume Fred has absolutely no fans outside the U.S. (which is unlikely) his audience is still only a little over half a percent of the total available viewing audience (about .64% in case you were curious). 

Overall, Fred's actual footprint is pretty small.  Much smaller than say, your average TV show. 

Which brings me back to Rocketboom.  It might seem odd to spend most of my post on Rocketboom talking about someone else but I wanted to set a baseline.  Having done so I can now present these numbers...

Now, it's important to remember that Rocketboom has other means of distribution but visiting their home page opens the YouTube video by default so one would think this would be a large source of their viewings. 

Given that fact the numbers above are nothing short of dismal.  Keep in mind the point I made above which is that "Internet numbers" need to be put in their proper perspective.  Internet video is easier to consume, easier to distribute and usually comes in a form that lends itself to multiple viewings.  All those differences make it much harder to equate normal markers to actual people (as opposed to something like TV where 1 viewing almost certainly corresponds to one actual person). 

So you could easily cut the above numbers in half and still have fairly optimistic estimates.  Given that fact I don't see how Sony plans to make enough money to justify a seven figure guarantee.  I'll happily eat my words if I'm wrong but this seems like classic "bubble behavior" to me.

The Wall Street Journal has an article on the current state of YouTube and Google's plans (as owner of YouTube) to add pre- and post- video ads  to all videos that they can verify as legitimate.

Sadly, the Wall Street Journal chose to put their article behind a subscription wall so I give you a quote from CNet instead...

Some of the other highlights in the Journal story:

• Google has identified 105 problems with YouTube's ad sales.

• Advertisers aren't willing to post their ads on many YouTube videos

• Because of legal questions, Google is only selling ads against video clips that have been approved by media companies and other partners, which, according to the story, is 4 percent of the total clips on YouTube. Think about the significance of that. Every minute more than 10 hours of video is uploaded to YouTube and only about 20 minutes is worth anything to the company.

YouTube has long been accused of being a warehouse for pirated material and media company, Viacom, filed a $1 billion copyright lawsuit against Google and YouTube. Google argues that the law doesn't hold it responsible for any illegal acts committed by users.

One of the books on my "personal favorites" list is "All The Rave: The Rise and Fall of Shawn Fanning's Napster"

The book purports to tell the behind the scenes tale of Napster 1.0 but really ends up telling the story of how Shawn Fanning's Uncle John squandered numerous opportunities to legitimize the service and eventually drove it out of business.  Essentially John Fanning deceived himself into thinking he had the upper hand against the Record Industry which led him to reject several offers to work with them towards monetization.

Offers that would have been much cheaper than the current iTunes model for consumers (and which resemble Napster 2.0's current subscription service)

I  suspect that Google, in its new found arrogance, is going down a similar path.  Services like Hulu, which works with the TV networks to bring their content to the web, seem to be booming while YouTube Flounders.  I think the reason for that is because Google refuses to admit what almost everyone knows which is that 99% of its business comes from copyrighted material that has been uploaded without the copyright holder's permission. 

Instead they chooses to ignore that fact and try to make their money on the miniscule 4% of verified videos which is a losing proposition.  What they should do is seek out copyright holders and say something like this...

"Look, we know your copyrighted material is being uploaded without your permission but the reality is there's nothing we can do to stop it.  If we take it down it will just be uploaded again and if we go out of business tomorrow it will just be uploaded to a different video service.  So rather than try to fight it let us help you to monetize the material (for a small cut of the profits of course)"

The above deal is identical to the one that Napster 1.0 almost reached with the Record industry and, had that happened, everyone would have been better off (cheaper for consumers, a bigger piece of the online pie for copyright  holders). 

I think the same deal would be perfect for YouTube but Google, the mighty king of online ads, has become too risk adverse to admit what is obvious and too arrogant to deal with copyright holders hat in hand.  So it looks like they'll continue to drown in a sea of red ink while taking a complete loss on 96% of their output. 

Either that or they'll just have to eventually give up on YouTube completely which would be a terrible loss for everyone.