YouTube is the reigning king of the online video world, especially in the U.S., and it's branched out into the search domain to knock off Yahoo as the second-most popular U.S. search engine. Recently, I've become convinced that the site could make itself even more useful by transforming itself into the ultimate video search engine and linking to content it doesn't have.
Linking to outside videos would build on the search strength of YouTube parent Google (GOOG) and would be especially effective at compensating for YouTube's weaknesses in news, sports, and live-streaming content. YouTube is pretty terrible when it comes to timely stuff; if they even make it to the site, news and pop culture clips are often pirated and get removed quickly.
Off-site video links could increase the overall utility of the site without adding to YouTube's cost burden of hosting videos. At the same time, better and more comprehensive search would make its search ads all the more valuable. And monetizing search is something Google knows infinitely more about than monetizing video.
This kind of action may seem counterintuitive for a portal, except that it's already been done by fellow video site Hulu, which has made an unselfish example of linking to outside locations of entertainment fare when it doesn't host the content itself.
Traffic Growth Is Less Important Now
Attempts to make YouTube more valuable by acquiring more valuable content haven't been paying off. Although YouTube tried to amp up its premium content stock last year, the pace of those deals hasn't picked up, and there has actually been some backtracking after renegotiations fell apart with music rights holders like Warner Music Group and Britain's Performing Rights Society. At this point it's clear that YouTube is never going to achieve its goal of hosting all the video in the world. And that's fine.
Unlike nearly every other Web site, YouTube doesn't need to make traffic growth its main priority. The site already has a 42.9% market share of video views, so relative increases are less important (not to mention approaching monopolistic). At this point, YouTube seems to be consistently the No. 26 or so Web property in the U.S., with recent overall traffic growth a gentle curve at best. (Just for kicks, if you hop back in time to May 2006, the site doubled its traffic month-over-month, for a grand total of 12.6 million visitors.) Not that the site is standing still; recent improvements to video stream quality have been excellent, and would seem to be somewhat responsible for the site's unbeatable 62.5 videos watched per viewer per month, up a full 10 videos from two months prior.
The Power of the Brand
Where YouTube could really improve its usefulness is to become the ultimate video search engine. This is what the forgotten stepchild, Google Video (which still awkwardly overlaps with YouTube), is supposed to be doing. But in January, YouTube had 2.9 billion searches, while Google Video had just 98 million, according to comScore (SCOR). That's not to say Google Video works perfectly and could just be ported over to YouTube—competitors like VideoSurf, Mefeedia, Blinkx, CastTV, Veveo, and Pixsy all seem to have put quite a bit more effort into doing video search and discovery well. Google needs to put a little more effort into video search to compete, but it's primed to walk away with the category on the strength of the YouTube brand alone.
An appropriate road sign for YouTube today might say "No Thru Traffic." Once you arrive on the site, you might keep clicking around to watch more videos, but you're unlikely to return to the rest of the Internet. Given that Google is its corporate parent, the site should see the value in letting visitors get back on the information superhighway to find what they want to watch.