By MICHAEL LIEDTKE, AP Business Writer
Yahoo Inc. is reprogramming its online video service so it's more like YouTube.com, an Internet upstart that has amassed a large audience during the past year with a free Web service that encourages people to post and share homemade clips.
Under the changes unveiled Thursday, Yahoo will store homemade videos on its own site for the first time as it attempts to build a platform for people to browse and rate the clips. The videos will be separated into different categories, including a section devoted to the most-watched selections.
Those features mirror YouTube, which has become the Web's most popular video channel since a pair of twentysomething technology whizzes started the San Mateo, Calif.-based company a year ago.
Now, Internet heavyweights like Sunnyvale, Calif.-based Yahoo are trying to chip away at YouTube's early lead as the rapidly growing number of high-speed Internet connections make it easier to transfer and watch online videos.
Just two weeks ago, Google Inc. retooled its video service so a special piece of software would no longer be required to upload clips to the online search engine leader. Meanwhile, Time Warner Inc.'s AOL is testing a service, called UnCut Video, that accepts clips.
Since launching its video service in late 2004, Yahoo has focused on indexing the clips available on other Web sites.
Although the company intends to continue indexing material from other sites, Yahoo is betting it will be able to lure more visitors and give them more reason to stick around longer by creating a unique video library through submissions from its 208 million registered users.
"We felt this was a necessary next step in our evolution," said Jeff Karnes, Yahoo's director of multimedia search.
Yahoo has been adding more attractions to its Web site to maintain its status as the Web's most trafficked destination and spur even more spending by advertisers -- the main source of the company's revenue.
By accepting homemade videos, Yahoo risks showing material that infringes on copyrights or contains pornographic scenes. Both of those problems have cropped up on YouTube, despite restrictions prohibiting users from posting such content.
Like YouTube, Yahoo will depend on its own users and copyright holders to flag rule-breaking videos so they can be removed from the site. To minimize the chances of an offensive video appearing before a big audience, Yahoo editors will screen all the clips that are featured on the service's front page, said Jason Zajac, the company's general manager of social media.
Yahoo will have to make up a lot of ground to catch up with YouTube, which boasts of streaming more than 40 million videos per day.
In April, YouTube attracted 12.5 million U.S. visitors, well ahead of MSN Video's second place service at 9.5 million visitors, according to Nielsen/NetRatings Inc. Yahoo's video service attracted 2.6 million visitors, trailing rival offerings from MySpace.com, Google and AOL, as well as YouTube and MSN, Nielsen/NetRatings said.
Although it leads the rest of the video pack, YouTube still hasn't proven it can make money as it subsists on $11.5 million in venture capital. Yahoo, in contrast, earned $160 million during the first three months of this year and ended March with $1.4 billion in cash.
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