Reputation Rehab

Dec 18, 2006  •  Post A Comment

Video-sharing Web sites are trying to wean themselves from the oldest profession on the Internet.

When sites including Metacafe, Break and Veoh first started up, they tried to lure viewers by quietly leaving the door open for sexually explicit clips. Now, as the sites try to play nice with mainstream advertisers-and potential acquirers-they’re backing away from naughty videos.

After Google’s landmark acquisition of YouTube for $1.65 billion in October, smaller online video sites have been fielding calls from potential suitors and cleaning up by tucking topless videos into the darker corners of their sites.

Late last month, Metacafe’s home page featured clips of a naked woman dancing with a sword and a fitness model posing topless on the beach. But after hiring investment bank Lehman Brothers to handle inquiries from potential buyers, and after Yahoo reportedly sniffed around the site as a possible acquisition target earlier this month, Metacafe moved those R-rated videos off center stage.

YouTube sold for $1.65 billion based on 30 million unique visitors at the time of purchase. At $55 per unique visitor, Metacafe would sell for $143 million with its 2.6 million uniques.

The kind of sanitizing that Metacafe performed marks the next turn in the evolution of user-generated video content on the Internet. What started out as a celebration of democratic entertainment is morphing into an industry. As Web video entrepreneurs find ways to make money with the millions of visitors they draw to their sites, their product is starting to more closely resemble the fare that media companies have created for mass audiences-and advertisers-for years.

While Metacafe CEO Arik Czerniak said he’s not shining up the site for a potential buyer, his business recently instituted a program to pay video creators for their work-excluding indecent material. Metacafe, which ranked as the eighth-largest viral video site in November, according to Nielsen//NetRatings, is also reorganizing its content in 2007 according to categories and genres that advertisers are more comfortable cozying up to.

And that doesn’t include porn.

Though pornographic videos have a long and storied history of driving early adoption of new video forms, from VHS to the Internet, their success in luring eyeballs comes with a price. Mainstream advertisers are loath to associate their brands with bare breasts, let alone steamier stuff.

However, entrepreneurs have made a real business out of user-generated porn on sites such as Xtube.com and Porntube.com, though amateur porn is a different business proposition and is based on sales, subscriptions and non-brand advertising.

“The porn can taint the other content if it gets to be substantial,” said Todd Dagres, general partner and founder of venture capital firm Spark Capital, which is invested in online video site Veoh Networks. “The value of the site will suffer because the porn will make the site less desirable to media companies and advertisers.”

That thinking forces CEOs at viral video sites to engage in a balancing act that embraces titillation without turning off advertisers.

“We don’t have any pornographic content on the site. It’s strictly prohibited,” Mr. Czerniak said. “We have more of the risque content … but you have to actively seek it.”

R-rated videos on Metacafe aren’t tough to track down. If a user turns off the family-friendly filter on the main page of Metacafe, he or she can still search for and find sex-movie scenes and videos of girls on a beach flashing their breasts.

Break Curbed Content

Break.com CEO Keith Richman said he decided to limit the amount of R-rated content on his site a year ago in order to attract brand advertisers, a strategy that helped the site land Rolling Rock and Verizon in the past few months.

Viewers can still upload videos of topless women, but that content will not be featured on the homepage or any of the site’s channels, Mr. Richman said.

“If you want to have boobs on your personal page, you are more than welcome to because we don’t have ads there,” said Mr. Richman, whose business ranked as the sixth-largest video site last month, according to Nielsen//NetRatings.

Mr. Richman and other video site CEOs say they adhere to a PG-13 policy for their main pages, modeling their content standards after ad-supported cable TV.

“We can put girls kissing,” Mr. Richman said. “We want to remain edgy.”

Veoh Networks, which focuses on long-form content online, grappled with the flesh factor earlier this year. In June, the 14th-ranked video site stopped accepting adult clips.

“When we first launched Veoh we made it a free-for-all,” said Veoh CEO Dmitry Shapiro. But that open invite drew too much adult content to the site. “We took it down in late June. … We didn’t do it to get sold. We did it for viewers because we felt if we allowed that to happen, very quickly it would be an adult site rather than a general purpose media play.”

Traffic numbers began to drop later that month and fell sharply in July-by 30 percent to 40 percent-but have recovered since, the company said.

“Though video remains a very exciting opportunity in the near term, it is the lack of control over content themes on many of these sites that remains the biggest obstacle to increased investment, even for some of our most progressive clients,” said T.S. Kelly, senior VP and director of research and insight for media agency MPG.

Venture capital firms funding the online video start-ups don’t want too much smut either.

Online video site StupidVideos.com President Greg Morrow said his company’s decision to launch the site in May 2005 with only PG-13 content helped the company secure its initial round of $5.6 million in funding from SoftBank Capital late last year.

Now the site includes high-profile advertisers such as Honda, General Motors, Sony and American Express. Mr. Morrow said StupidVideos places ads only around videos that do not include nudity, gratuitous violence or swear words.

He acknowledges that he’s paid a price in forgoing flesh.

“We are sacrificing some organic traffic to be more advertiser-friendly. We didn’t want to base a business on marijuana grow-light’ ads,” he said.

Visitors to other video sites can also find racy content if they plug in adult search terms. Just last week, for instance, Revver included “PG-13”-labeled videos of girls kissing and tantalizingly exposing their bellies, as well as a handful of more “artistic” bare-breast shots with the “R” label.

Revver said it screens every piece of content before it posts them and pairs advertisers only with the kind of content they specify they want.

Google Video also counts its fair share of girlie clips and the top 100 videos on the site usually include about a dozen racier videos at any given time. YouTube is the cleanest of the pack and has also been the most successful in striking deals with advertisers, such as Coca-Cola earlier this month, and with broadcast networks, such as CBS and NBC.

The user agreements for YouTube and Google both forbid posting of pornographic material.

“The value of the Web is you can be more edgy than traditional media, but we have clear boundaries you have to draw from an advertiser level and a personal level,” Mr. Richman said.

Read More in Daisy Whitney’s Blog