Hamish McRae: YouTube is young, democratic and shows that the world is changing before our eyes

The big point is that it's a pretty pure market, and like all markets it signals what people really want
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The Independent Online

If you want to understand what the sale of YouTube to Google for $1.65bn (£890m) really means... click on to YouTube.com. Up pops a clip with Chad and Steve (the co-founders Chad Hurley and Steve Chen) that is wonderful for a whole host of reasons.

It is informal; it is un-staged; it has minimal production values; it is funny; and it is honest. It is two young people (the third founder, Jawed Karim, left to go back to university) who are just thrilled to have made themselves some millions - but also to make clear that they have done so as part of a community. It is a business, sure, but it is also a club.

Slick it was not, but the clip was apposite enough to be perking up on Sky News by lunchtime yesterday. Do not, however, rely on the television version. Go online, because the experience itself is part of the thing. Immediately below Chad and Steve is a clip, shot entirely on a mobile phone, ranked at four and a half stars just like Chad and Steve. Just below that... well, if you are not one of the 20 million people who log on every month, have a look for yourself.

There seem to me to be three separate stories here: a human story, a business story and a social story. A word about each.

The human story is self-evident. It is wonderful when young people are successful. This is not just because of the dosh. The actual amount of money they are making is apparently "only" in the tens of millions for most of that $1.65bn goes to the venture capital firm that had backed them. There are plenty of other self-made people in their media world, also in their twenties, who have made as much or more.

One immediate example is Paris Hilton, whose intuitive marketing genius made her the star of YouTube's first "brand channel" back in August. But there are lots of others in entertainment, in sport and in financial services who have that rare set of skills that enables them to make millions in their twenties. We are in a world where you can make it young.

What gives this particular human story its resonance is the way in which it fits all the classic business success story templates. Two people, one the salesman, the other the boffin. The juxtaposition between the grotty offices, compete with rats (which of course got their airtime on YouTube too), and the high-tech brilliance. The fact that the company invented something new - a new marketplace in fact - and was able to turn it into a hugely saleable business in 18 months. And the fact that a venture capital company can make a huge profit by taking a risk.

That leads to the business story. YouTube, like its purchaser, Google, is a fascinating example of the way in which charging for services, or rather not charging for them, has overturned the rules of business. Both YouTube and Google give away their basic product - the videos and the search engine - for free.

They make their money by the peripheral elements attached to that basic product, though it is not yet clear in the case of YouTube quite what those will be. For example people watching clips may have also to watch a short advert beforehand - though, up to now, it has turned its back on that.

The main point of the business story, it seems to me, is that anyone who can figure out a way of getting people to watch a particular site has created an instant club - and access to that club is a valuable commodity. That is particularly true of media. A lot of people reading this newspaper feel themselves members of a club of like-minded people and we should probably find ways of making that membership more explicit.

On the other hand, few things are more irritating than companies which pretend that by buying, say, a new computer you are somehow a member of their club - that they in some way own a bit of your loyalty. You know what they are on about: if they can get you to accept e-mails about their products, they can probably sell you some upgrade in the future. At least airline clubs give you tangible rewards, such as lounge access, for free in return for your supposed loyalty.

The clever thing about YouTube is that it seems to have created a genuine community. It is about sharing, not selling.

That in turn leads to the social dimension of this story. YouTube is profoundly democratic. There is no media tycoon determining what political line the clips should take. There are no banks of clever executives manipulating the emotions of their prey. There are no trendy art directors using their skills to sell products.

Instead of the manipulated world of Hollywood or mainstream television, what you watch is what you choose to watch. The videos you put on to the system are the videos you want to put onto the system. There are no "hidden persuaders". There are house rules of course, because clubs have to have rules.

Thus, no clip can be longer than 10 minutes, though you can split them. There are restrictions on violence and drugs - though if you pop "Kate Moss" into the search engine, the top clip that comes up (rated four-and-a-half stars with 158,309 views) is not one of her on the catwalk. There are also real legal issues, of which the most important is copyright. But the big point here is that it is a pretty pure market, and like all markets it signals what people really want.

As such, it already tells us a lot about human beings. This is at the moment a skewed picture, for it is predominantly North American, both as to its content and its viewing numbers. Expect that to change: Japanese content is already rising. It is also skewed by the tastes of the young, mostly I suspect because US students are the people who have the time and tech skills to upload the stuff. But all this is very early days, for the thing is only 18 months old. It is still a fluffy bunny. Expect it to acquire edge.

YouTube will have its imitators, for there must be room for more video marketplaces around the world. YouTube videos will inevitably tend to become more polished and more significant as Google finds ways to share advertising revenues with the filmmakers. Google has managed to maintain a dominant market share for its search engine but that is surely because it is better than the opposition for most tasks. As video-sharing spreads out from its roots on the US West Coast, expect it to spread its democratic message. This will affect global politics, particularly since it combines seemlessly with other technologies.

Suppose a video were to exist of preparations for the North Korean nuclear test, shot perhaps on a mobile phone. Suppose one of our cabinet ministers noted for his espousal of family values gets spotted late at night doing something he shouldn't have. Suppose clips of the Israeli attack on Beirut airport were up on the web minutes after the first wave of bombers flew in. At a host of different levels, politics will be different. We don't know quite how different, but something big - and something fundamentally supportive of democracy - is afoot.