History of YouTube

YouTube was founded by Chad Hurley, Steve Chen and Jawed Karim, who were all early employees of PayPal.^[1] Prior to PayPal, Hurley studied design at Indiana University of Pennsylvania. Chen and Karim studied computer science together at the University of Illinois at Urbana-Champaign.^[2] The domain name "YouTube.com" was activated on February 14, 2005, and the website was developed over the subsequent months. The creators offered the public a preview of the site in May 2005, six months before YouTube made its official debut. Like many technology startups, YouTube was started as an angel-funded enterprise from a makeshift office in a garage. In November 2005, venture firm Sequoia Capital invested an initial $3.5 million;^[3] additionally, Roelof Botha, partner of the firm and former CFO of PayPal, joined the YouTube board of directors. In April 2006, Sequoia and Artis Capital Management put an additional $8 million into the company, which had experienced huge popular growth within its first few months.^[4]
During the summer of 2006, YouTube was one of the fastest growing websites on the Web,^[5] and was ranked the 5th most popular website on Alexa, far out pacing even MySpace's rate of growth.^[6] According to a July 16, 2006 survey, 100 million video clips are viewed daily on YouTube, with an additional 65,000 new videos uploaded every 24 hours. The website averages nearly 20 million visitors per month, according to Nielsen/NetRatings,^[7] where around 44% are female, 56% male, and the 12- to 17-year-old age group is dominant.^[8] YouTube's pre-eminence in the online video market is substantial. According to the website Hitwise.com, YouTube commands up to 64% of the UK online video market.^[9]
On October 9, 2006, it was announced that the company would be purchased by Google for US$1.65 billion in stock. The purchase agreement between Google and YouTube came after YouTube presented three agreements with media companies in an attempt to escape the threat of copyright-infringement lawsuits. YouTube will continue operating independently, with its co-founders and 67 employees working within the company.^[10] The deal to acquire YouTube closed on November 13, and was, at the time, Google's second largest acquisition.^[11] Google’s February 7, 2007 SEC filing revealed the breakdown of profits for YouTube’s investors after the sale to Google. At the time of reporting Sequoia Capital’s shares were valued at more than $442 million, Chad Hurley’s at more than $345 million, Steve Chen’s at more than $326 million, Artis Capital Management at more than $83 million, and Jawed Karim’s at more than $64 million.

Before being purchased by Google, YouTube declared that its business model was advertisement-based, making 15 million dollars per month. Some industry commentators have speculated that YouTube's running costs—specifically the bandwidth required—may be as high as 5 to 6 million dollars per month,^[15] thereby fueling criticisms that the company, like many Internet startups, did not have a viably implemented business model. Advertisements were launched on the site beginning in March 2006. In April, YouTube started using Google AdSense^{[citation needed]}. YouTube subsequently stopped using AdSense but has resumed in local regions.
Advertising is YouTube's central mechanism for gaining revenue. This issue has also been taken up in scientific analysis. Don Tapscott and Anthony D. Williams argue in their book Wikinomics that YouTube is an example for an economy that is based on mass collaboration and makes use of the Internet. "Whether your business is closer to Boeing or P&G, or more like YouTube or flickr, there are vast pools of external talent that you can tap with the right approach. Companies that adopt these models can drive important changes in their industries and rewrite the rules of competition" ^[16] "new business models for open content will not come from traditional media establishments, but from companies such as Google, Yahoo, and YouTube. This new generation of companies is not burned by the legacies that inhibit the publishing incumbents, so they can be much more agile in responding to customer demands. More important, they understand that you don't need to control the quantity and destiny of bits if they can provide compelling venues in which people build communities around sharing and remixing content. Free content is just the lure on which they layer revenue from advertising and premium services".^[17]
Tapscott and Williams argue that it is important for new media companies to find ways to make a profit with the help of peer-produced content. The new Internet economy that they term Wikinomics would be based on the principles of openness, peering, sharing, and acting globally. Companies could make use of these principles in order to gain profit with the help of Web 2.0 applications: “Companies can design and assemble products with their customers, and in some cases customers can do the majority of the value creation”.^[18] Tapscott and Williams argue that the outcome will be an economic democracy.
There are other views in the debate that agree with Tapscott and Williams that it is increasingly based on harnessing open source/content, networking, sharing, and peering, but they argue that the result is not an economic democracy, but a subtle form and deepening of exploitation, in which labour costs are reduced by Internet-based global outsourcing.

YouTube was founded by Chad Hurley, Steve Chen, and Jawed Karim, who were all early employees of PayPal.^[6] Hurley had studied design at Indiana University of Pennsylvania, while Chen and Karim studied computer science together at the University of Illinois at Urbana-Champaign.^[7]
According to a story that has often been repeated in the media, Hurley and Chen developed the idea for YouTube during the early months of 2005, after they had experienced difficulty sharing videos that had been shot at a dinner party at Chen's apartment in San Francisco. Karim did not attend the party and denied that it had occurred, while Hurley commented that the idea that YouTube was founded after a dinner party "was probably very strengthened by marketing ideas around creating a story that was very digestible".^[8]
YouTube began as a venture-funded technology startup, primarily from a $11.5 million investment by Sequoia Capital between November 2005 and April 2006.^[9] YouTube's early headquarters were situated above a pizzeria and Japanese restaurant in San Mateo, California.^[10] The domain name www.youtube.com was activated on February 14, 2005, and the website was developed over the subsequent months.^[11]
The first YouTube video was entitled Me at the zoo, and shows founder Karim at the San Diego Zoo.^[12] The video was uploaded on April 23, 2005, and can still be viewed on the site.^[13]
YouTube offered the public a beta test of the site in May 2005, six months before the official launch in November 2005. The site grew rapidly, and in July 2006 the company announced that more than 65,000 new videos were being uploaded every day, and that the site was receiving 100 million video views per day.^[14] According to data published by market research company comScore, YouTube is the dominant provider of online video in the United States, with a market share of around 43 percent and more than 14 billion videos viewed in May 2010.^[15] YouTube says that over 48 hours of new videos are uploaded to the site every minute, and that around three quarters of the material comes from outside the US.It is estimated that in 2007 YouTube consumed as much bandwidth as the entire Internet in 2000.^[18] Alexa ranks YouTube as the third most visited website on the Internet, behind Google and Facebook.^[19]
The choice of the name www.youtube.com led to problems for a similarly named website, www.utube.com. The owner of the site, Universal Tube & Rollform Equipment, filed a lawsuit against YouTube in November 2006 after being overloaded on a regular basis by people looking for YouTube. Universal Tube has since changed the name of its website to www.utubeonline.com.In October 2006, Google Inc. announced that it had acquired YouTube for $1.65 billion in Google stock, and the deal was finalized on November 13, 2006.^[22] Google does not provide detailed figures for YouTube's running costs, and YouTube's revenues in 2007 were noted as "not material" in a regulatory filing.^[23] In June 2008, a Forbes magazine article projected the 2008 revenue at $200 million, noting progress in advertising sales.^[24]
In November 2008, YouTube reached an agreement with MGM, Lions Gate Entertainment, and CBS, allowing the companies to post full-length films and television episodes on the site, accompanied by advertisements in a section for US viewers called "Shows". The move was intended to create competition with websites such as Hulu, which features material from NBC, Fox, and Disney.In November 2009, YouTube launched a version of "Shows" available to UK viewers, offering around 4,000 full-length shows from more than 60 partners.^[27] In January 2010, YouTube introduced an online film rentals service,^[28] which is currently available only to users in the US. The service offers over 6,000 films.^[31]

Copyrighted material

YouTube has been criticized for failing to ensure that uploaded videos comply with copyright law. At the time of uploading a video, YouTube users are shown a screen with the message "Do not upload any TV shows, music videos, music concerts or advertisements without permission, unless they consist entirely of content that you created yourself".^[130] Despite this advice, there are still many unauthorized clips of copyrighted material on YouTube. YouTube does not view videos before they are posted online, and it is left to copyright holders to issue a takedown notice pursuant to the terms of the Digital Millennium Copyright Act.
Organizations including Viacom, Mediaset, and the English Premier League have filed lawsuits against YouTube, claiming that it has done too little to prevent the uploading of copyrighted material.Viacom, demanding $1 billion in damages, said that it had found more than 150,000 unauthorized clips of its material on YouTube that had been viewed "an astounding 1.5 billion times". YouTube responded by stating that it "goes far beyond its legal obligations in assisting content owners to protect their works". Since Viacom filed its lawsuit, YouTube has introduced a system called Video ID, which checks uploaded videos against a database of copyrighted content with the aim of reducing violations.^[134][135] In June 2010, Viacom's lawsuit against Google was rejected in a summary judgment, with U.S. federal Judge Louis L. Stanton stating that Google was protected by provisions of the Digital Millennium Copyright Act. Viacom announced its intention to appeal the ruling.^[136]
In August 2008, a US court ruled in Lenz v. Universal Music Corp. that copyright holders cannot order the removal of an online file without first determining whether the posting reflected fair use of the material. The case involved Stephanie Lenz from Gallitzin, Pennsylvania, who had made a home video of her 13-month-old son dancing to Prince's song "Let's Go Crazy", and posted the 29-second video on YouTube.^[137]

Privacy

In July 2008, Viacom won a court ruling requiring YouTube to hand over data detailing the viewing habits of every user who has watched videos on the site. The move led to concerns that the viewing habits of individual users could be identified through a combination of their IP addresses and log in names. The decision was criticized by the Electronic Frontier Foundation, which called the court ruling "a setback to privacy rights".^[138] U.S. District Court Judge Louis L. Stanton dismissed the privacy concerns as "speculative", and ordered YouTube to hand over documents totaling around 12 terabytes of data. Judge Stanton rejected Viacom's request that YouTube hand over the source code of its search engine, saying that it was a trade secret.

Controversial content

YouTube has also faced criticism over the offensive content in some of its videos. The uploading of videos containing defamation, pornography, and material encouraging criminal conduct is prohibited by YouTube's terms of service.^[141] Controversial areas have included Holocaust denial and the Hillsborough disaster, in which 96 football fans from Liverpool were crushed to death in 1989.
YouTube relies on its users to flag the content of videos as inappropriate, and a YouTube employee will view a flagged video to determine whether it violates the site's terms of service.^[141] However, this procedure has been criticized by the United Kingdom government. In July 2008, the Culture and Media Committee of the House of Commons of the United Kingdom stated that it was "unimpressed" with YouTube's system for policing its videos, and argued that "Proactive review of content should be standard practice for sites hosting user-generated content". YouTube responded by stating:

We have strict rules on what's allowed, and a system that enables anyone who sees inappropriate content to report it to our 24/7 review team and have it dealt with promptly. We educate our community on the rules and include a direct link from every YouTube page to make this process as easy as possible for our users. Given the volume of content uploaded on our site, we think this is by far the most effective way to make sure that the tiny minority of videos that break the rules come down quickly.^[144]

In October 2010, U.S. Congressman Anthony Weiner urged YouTube to take down from its website videos of imam Anwar al-Awlaki, tied to the accused Fort Hood shooter, Christmas Day bomber, and attempted Times Square bomber, and on the U.S. targeted killing list, saying that by hosting al-Awlaki's messages, "We are facilitating the recruitment of homegrown terror".^[145] British security minister Pauline Neville-Jones commented: "These Web sites would categorically not be allowed in the U.K. They incite cold-blooded murder, and as such are surely contrary to the public good." In November 2010, YouTube removed from its site some of the hundreds of videos featuring al-Awlaki's calls to jihad. It stated that it had removed videos that violated the site’s guidelines prohibiting "dangerous or illegal activities such as bomb-making, hate speech and incitement to commit violent acts", or came from accounts "registered by a member of a designated foreign terrorist organization".^[146] In December 2010, YouTube added "promotes terrorism" to the list of reasons that users can give when flagging a video as inappropriate

Social impact

Before the launch of YouTube in 2005, there were few easy methods available for ordinary computer users who wanted to post videos online. With its simple interface, YouTube made it possible for anyone with an Internet connection to post a video that a worldwide audience could watch within a few minutes. The wide range of topics covered by YouTube has turned video sharing into one of the most important parts of Internet culture.
An early example of the social impact of YouTube was the success of The Bus Uncle video in 2006. It shows a heated conversation between a youth and an older man on a bus in Hong Kong, and was discussed widely in the mainstream media.^[122] Another YouTube video to receive extensive coverage is guitar,^[123] which features a performance of Pachelbel's Canon on an electric guitar. The name of the performer is not given in the video. After it received millions of views The New York Times revealed the identity of the guitarist as Lim Jeong-hyun, a 23-year-old from South Korea who had recorded the track in his bedroom.^[124]
Charlie Bit My Finger, which was uploaded on May 22, 2007, is a viral video that has received the most views of any user generated YouTube video, with over 300 million views.The clip features two English brothers, with one-year-old Charlie biting the finger of his brother Harry, aged three.^[128] In Time's list of YouTube's 50 greatest viral videos of all time, "Charlie Bit My Finger" was ranked at number one