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Wed 9 May 2012 04:39 PM

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Eastern promises

Video-sharing website YouTube is turning its sights on the Middle East, launching eight local homepages in the region in the last year. But will it be enough to turn its fortunes around?

Eastern promises

“You can write 1,000 words but you put up a 30-second video and it tells so much more; it’s so much more engaging,” says Matthew Glotzbach.

As the managing director at YouTube for Europe, Middle East and Africa, Glotzbach is employed to encourage greater use of the California-based video-sharing website. But the tremendous growth of the site since its inception just seven years ago is testament to the fact that it — along with the millions of videos that are uploaded by users across the world — has changed the way people consume their media and watch videos.

Today, as much as 60 hours of video are uploaded onto YouTube’s platform every minute while more than three billion hours of video are watched every month. The Middle East and North Africa is YouTube’s second-largest market after the US with 167 million views per day.

With figures as high as that, it is little wonder that the Google-owned website is turning its attention to the region, launching eight localised homepages in the Middle East in the last year alone.

“It’s always been the plan [to launch local homepages in the region] but I think the events of the Arab Spring have helped crystallise in everyone’s mind — advertisers, partners and Google users — the importance of having a local presence,” Glotzbach tells CEO Middle East at the official launch of its UAE homepage.

“I think there is massive potential for the business of YouTube here,” he continues. “It really is an eco-system where the viewers, as they find more and more local content, will help motivate local content creators to get onto the platform. As there is more content and more viewers, that will allow advertisers to reach that audience on the platform, so it’s a virtuous cycle.”

Social networks such as YouTube, Facebook and Twitter have become increasingly popular during the Arab Spring, used as tools to organise demonstrations and publicise events. YouTube has seen the number of its playbacks in the MENA double in the last year, in part due to global interest in the mass protests seen across the region.

A lack of regulation regarding social networks has left many local governments struggling to deal with how best to deal with sensitive issues. But YouTube says it will rely on its own global community guidelines, which automatically block illicit content and allow users to ‘flag’ inappropriate videos, rather than introduce specific rules for the Middle East.

“From an advertising side, obviously we will work to respect local laws and customs in terms of what local ads can run. I think it’s more for global advertisers who are trying to reach the local audience as local advertisers are more familiar with those laws and customs,” explains Glotzbach.

“From a content perspective, we rely on the global community guidelines to govern the content on the platform. Any user that uploads content on the platform is agreeing to those community guidelines and any user on the platform globally can flag it as inappropriate if it doesn’t meet the terms of those rules and then that flagging will help prioritise it [for the YouTube team],” he adds.

In 2005, three former PayPal employees, Chad Hurley, Steve Chen and Jawad Karim founded YouTube. For years, the three claimed the inspiration behind its creation was sparked by the difficulty they experienced sharing videos shot during a dinner party at Chen’s apartment.

Karim has since admitted he did not attend the party and later denied that it had ever occurred. Chen, meanwhile, has publicly said the story “was probably very strengthened by marketing ideas around creating a story that was very digestible”.

One aspect of YouTube not up for creative licence is the vast sum the internet giant Google paid for it in 2006. The California-based website acquired YouTube for $1.65bn, its largest acquisition at the time, enabling it to thrive in an area of the internet where it had that at that point failed to gain a footing.

“It does seem to be difficult to remember a time without YouTube. When Google acquired YouTube in 2006 there was a lot of scepticism about the acquisition, I think a lot of sentiment [was based on the idea] that maybe the whole online video thing was not that big of a deal and maybe it wasn’t going to matter all that much. I’m glad Google had the foresight to actually realise that access to video was going to be so critical,” says Glotzbach.

Under Google’s ownership, YouTube has continued to thrive. In 2008, the firm inked a deal with MGM to post full-length films and television episodes on the site. It also has similar agreements in place with Lions Gate Entertainment and CBS. Two years later, YouTube introduced an online films rentals service and in 2010 started to stream free live content, including 60 Indian Premier League cricket matches.

Despite the hefty price tag Google paid for YouTube, the tech giant has struggled to reach profitability. As recently as July, CEO Larry Page admitted the firm still hadn’t found a way to make the video-sharing website a long-term revenue generator. During a conference call to discuss the company’s second-quarter earnings, Page said the website needed more investment to be profitable.

Its parent company has ploughed millions of dollars into creating new features, including a new video-editing feature, which allows users edit their videos on the site after uploading them. Tech commentators have said that while the new video-editing feature is unlikely to transform YouTube on its own, its introduction — coupled with Google’s premium video options — could help transform the site into an ecosystem rather than a website, allowing advertising to see more value in its business.

Part of the reason that Google is placing so much emphasis on the Middle East will be to grow its business outside of the US. The region’s oil-rich wealth, coupled with high levels of internet penetration, makes the region a prime target in which to grow its business.

The new ‘local’ YouTube homepage means that not only will local users be able to access regional content that is more relevant but it will also allow regional businesses to advertise to local audiences. The website launched its video homepage advertising on April 22 and plans to roll out a number of new advertising features over the coming months, says Glotzbach, adding that the website is already in talks with several local partners.

“We’ve had a number of MENA advertisers that have been gaining access to the global audience but this will be the first time in the region that they can engage on an advertising basis with the local audience,” he says.

Could the Middle East mark the turning points in YouTube’s future? Only time will tell.

GCC governments crack down on social networks

The growing popularity of social networks across the Arab world has left many regional governments struggling to regulate sensitive information amid a lack of specific laws for prosecution. Several governments have announced plans to regulate the use of social networking sites such as Twitter and Facebook.

Last month, UAE authorities said they would implement round-the-clock monitoring of social media websites. Websites such as Twitter and Facebook will be checked by anti-electronic crime teams in Dubai and other emirates, in a bid to crackdown on abuse and defamation, Major Salem Obaid Salmeen, deputy director of anti-electronic crimes at Dubai Police’s CID has said.

Kuwaiti authorities have also said the country plans to pass laws this year to regulate the use of social networking sites in the wake of cases of alleged blasphemy and sectarianism that have prompted protests.

In recent months Gulf states have instigated a crackdown on social media communications that are critical of regional governments, as well as those deemed blasphemous. Earlier this year, Saudi authorities issued an arrest warrant for 23-year old journalist Hamza Kashgari after he posted messages on the site Twitter that were deemed as blasphemous of Islam. After travelling to Malaysia, Kashgari was extradited back to Saudi where he could now face the death penalty.

Similarly, Emirati citizen Saleh Al Dhufairi was arrested in the UAE last month after publishing comments on Twitter that criticised the Gulf state’s security forces.

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