The YouTube of China is more than just cat videos
Koo is frank about the censorship realities for anyone wanting to play in this space in China. "We have much more vigilant screening," he acknowledges, than YouTube does in the U.S. Beijing doesn't want to see any user-generated videos giving props to the Dalai Lama, discussing Tiananmen Square or advocating independence for Taiwan. You either live with those restrictions, among others, or you don't play. "We have a license from the State Administration of Radio and Television, " Koo says, "and our chief editor communicates with them regularly in terms of content we need to be careful about."
How did Youku emerge as the pre-eminent force in China's online video business? Two main reasons, Koo says. First, the company decided not to outsource its technological back office to Limelight or Akamai, (AKAM) or their Chinese equivalents. That "allowed us to do two things: contain our costs, one, and make absolutely sure that the user experience [for video] was good. Obviously, the user experience is critical, and speed is the key. We wanted to control that, so we invested in making sure we got it right, rather than outsourcing that responsibility to someone else.''
The other thing Youku did was come up with its own business model. Little irritates Koo more than the assertion that Youku is simply a Chinese version of YouTube. "At the least we're a combination of YouTube and Hulu," he says, "but the fact is we go well beyond that." Indeed, in addition to providing a platform for user generated content (like YouTube) and carrying TV dramas (ala Hulu), Youku is a co producer of original online video programming. It contracted with ten young Chinese film-makers to produce online films of varying lengths. And a recent film Youku commissioned, called "Old Boys," about two 40-something friends who enter a rock and roll contest, attracted over 30 million viewers to its site. (You can watch the film, replete with English subtitles.) "We re really a hybrid, Koo says. "The way we think about content is very different.''
Koo might not have YouTube to worry about, but several of China's online big guns -- Baidu, SOHU and Sina among them -- are coming after Youku and Tudou. The market for online video is too new, and growing too rapidly, for them to ignore.
There are other key differences, Koo says, in the market in China for online video compared to the U.S., that make it a YouTube/Youko comparison unfair. For one, the U.S. has fewer but more dominant content providers, who watched the recording industry get eaten alive by the digital music revolution, and are playing hardball with online video companies who they fear might try the same trick with online video. Koo benefits from a more fractured online video environment in China, but also has to work hard to distinguish his brand. Yet Koo believes both countries share this in common: video on demand, delivered "over the top" via unmanaged networks like Youku.com, is China's media future, just as it is ours.
