Wednesday, August 12, 2009

Ron Talks About Building a Video Site for Kids... and Clashing With the Laws of YouTube

Ron is the creator of Totlol.com, a site for kids and their parents which uses the YouTube API. When he sent me the pointer I blogged about it, and his approach inspired a site of mine, and Ron and I had been periodically emailing since then. On June 5 this year, Techcrunch opened an article with the headline “Totlol Developer Forced To Shut Down Video Service For Kids”. Here’s some of the background.

Could you introduce yourself and your site, Totlol to us?

Ron Ilan, male, about 40, one wife, two kids.

My first computer was a ZX81 but it was borrowed for only a couple of weeks. By the time I got to own a PC, it already came with an Internet connection. My CS education peaked with a C programming lab where we had to write an interpreter to a made-up language. All I can remember is that by the end of the semester the made-up language grew to monstrous proportions and my pointers were all over the place. I ended up with an MBA. Formally, I guess I’m supposed to be better with Term Sheets than Style Sheets.

I started developing Internet sites and related software in the mid-nineties, worked for both a well-funded start-up and a VC during the dot.com heydays and then, as part of the sobering up process, went solo as a web developer. That was seven years ago.

Totlol is a community-moderated video website designed for kids and powered by YouTube.

It is not just a pile of embeds, it is a full-featured personalized web application. This means for example that a user can link their YouTube account or can add, for their eyes only, whatever video they want. At the same time, this user can benefit from community moderation of videos added by others. It has various optimization methods, including an Age Optimizer, that strive to make user experience better and content discovery easier.

An early prototype of Totlol. Instead of using an embedded player, Ron creates his own player design thanks to the YouTube Chromeless Player JavaScript API.

My design goal was to provide a parent-kid duo that uses YouTube, a better product on the same platform. There are a lot of additional explanations at the site’s about page.

Who implemented the site, and based on what technologies?

I basically built Totlol by myself. Everything from server configuration to favicon.ico is my fault. I also operate it by myself. Turns out that having to answer support mail is a great motivator to develop a help system and kill bugs. :)

Technically it is LAMP and uses Zend Framework, YouTube/Google Data API, OAuth and YouTube Chromeless Player. The server stack is replaceable and I actually run WAMP for development.

In this case, and I think in a lot of other cases too, user experience is the key. It is mainly determined by the details of the front-end not the technologies of the back-end. Here the Chromeless Player was the key enabler.

When did the site launch, and how did it grow over time? What kind of traffic do you get these days?

I launched Totlol in May 2008 with a very rough first version I “hacked” in a couple of months and less than a hundred videos.

In early September, 2008 I had a “Beta”, which was almost a complete re-write. I did several major upgrades after that which introduced or refined a lot of the “deeper” site features you can use today.

I released the iPhone Web App in April, 2009. The video subset is now at over 20,000.

In terms of traffic, growth was pretty stable; there is no hockey stick here. Before “all the drama” Totlol had 150,000 visits a month, it dropped a little but it can catch back up to the trend.

How did you try to get the word out about Totlol? And what do you think were the biggest factors in increasing the site’s popularity?

First thing I did, before the site was mentioned online, was go with the family to David Lam park in downtown Vancouver and hand out little flyers to other families. While I did this mostly to get the “vibe”, some of these early signups are still active users.

From there on I basically used only one promotion method – I tell about the site to anyone interested, including bloggers and press, and I keep them updated about developments. I answer any question I get, fast, in detail and with minimum PR jargon. I didn’t do any other proactive marketing, not in social media and not in online advertising.

Ron comments his traffic over time.

Ron explains: “This is a visualization of the first 5,000 videos submitted to Totlol. Bright Red = removed from YouTube. Pink = no longer API Player accessible. Purple = Good.” The oldest video is shown at the top left, time progresses downwards. “Generally speaking, red appears over time as videos are taken down (obviously). It is reasonable to assume that earlier submissions were probably easier to find as they were on average more ’established’ in YouTube, hence they apparently were also less likely to be removed.”

There are two things that work to my advantage here: I have a good story - a talked about subject, an original approach, a person doing the work of a big corporation - and I have a good product.

Initial exposure is mainly driven by the story, but this is fickle traffic. The product is what actually builds the user base. While the story can hardly evolve the product can always improve and expand. Happy loyal users are (surprise) the key.

While Totlol has come a long way, site popularity is not even a fraction of its potential. Nielsen had a report last year that gouged the number of Americans aged 2-11 who use YouTube every month at over 4 million. It is hypothetical to wonder how many of those would have converted had they been made aware of Totlol.

What was your original business plan for Totlol?

I have to admit I started working on Totlol not because I had a great business plan but rather because I saw the clear need and thought I can serve it.

I figured pretty early that there was a problem honestly making money from sites for kids, but given my lean cost side I planned to make Totlol sustainable with the help of one long-term brand sponsor.

At the same time, with every upgrade to Totlol, I inched closer to a generic version of the system that powers it. I nicknamed it TubeStrap as in YouTube plus Bootstrap.

The goal was to enable site owners to create stand-alone, YouTube powered websites without writing any code. If you look at the offering YouTube currently has for site owners you will clearly see the void it was to fill.

The business model for such a system was to be based, mainly, on advertising revenue share. Since this could be integrated into existing communities and since the topics are limitless I assumed it could become a pretty good business.

Obtaining external funding or increasing the head count was never a part of the business plan.

You told me before how you ran into some troubles with YouTube’s policies. Could you tell us about that?

Yep. I ran into troubles, and it felt like running into a brick wall.

The YouTube API Terms of Service govern what can or can’t be done. They “evolve over time as technology advances and YouTube continues to grow” and they currently contain the following restriction:

“You agree not to use the YouTube API for any of the following commercial uses unless You obtain YouTube’s prior written approval:... the sale of advertising, sponsorships, or promotions on any page of the API Client containing YouTube audiovisual content, unless other content not obtained from YouTube appears on the same page and is of sufficient value to be the basis for such sales.”

A video website is mainly used for (surprise) watching videos. It is navigated mainly by (surprise) jumping from one video to the other. The occurrences of a pageviews in which there is no audiovisual content are random and far-between. Getting sponsorship under these terms would be ridiculous. Advertising revenue would be practically non-existent.

This restriction has not always been there, but with it, and with a message that it will be enforced, my business plan collapsed. I found myself running a website that is loved and growing but has no way of generating revenue and a development path that has no future. I seriously considered closing Totlol down.

What approach are you using now, trying to overcome the policy problems you were facing? And does it work well for you?

“Not surprising, when you go from free to paid, a path not often taken, you learn a few new things ... It is a sort of confirmation of value and it makes anything other than the customer irrelevant.”

YouTube published an adjacent document to the ToS called “Using the YouTube APIs to Build Monetizable Applications” This document discusses the restrictions set in the ToS and explains how one can charge customers for using an application in compliance with the ToS.

Last month, instead of closing down, I converted Totlol to a members-only web site and you can’t use the site without signing up. Members are expected to pay membership fees of $3 a month or $18 a year or $54 till the kids grow up.

When you click through to a video from the frontpage, printed over a video still image you’ll read “This is a members only website ... Please Login or Signup”.

Not surprising, when you go from free to paid, a path not often taken, you learn a few new things.

First it feels good. It is a sort of confirmation of value and it makes anything other than the customer irrelevant. It is as if the shareware days are back.

Second, on the upside, users are willing to pay and are willing to renew short-term memberships that expire. The more engaged they are with the application, the higher they value it and the higher their willingness to pay is. The “deeper” features of the product are the ones that float the value. At 5 cents a day it becomes a no-brainer for a busy parent.

Third, on the downside, you are “Mr. Nice Guy” no more. Long-time users leave, some trash the site publicly, some send angry e-mails, some just explain that you are “expected” to make money off advertising and the site “should” remain free. There are two people who already developed GreaseMonkey scripts to stop membership fee request nagging.

Then there is competition. No matter how small the fees are, their existence opens the door to copycat products that are externally funded. A recently launched example* comes from a company with over 20 employees. They don’t have a better product, nor a smarter model, but they do have $10 million in VC funding to burn through.  [*Ron is talking about ZuiTube, I believe.]

The bottom line of this is actually pretty predictable – the revenue generated by fees falls below the equivalent potential advertising revenue, but it lands in the same ballpark. While my business plan is still in ruins, at least closing Totlol is off the table.

Do you have some words of advice for anyone trying to start a video based site, like a site based on YouTube content?

I would have advised them to go do something else, but I don’t think I need to, as developers are smart and already figured this one out.

“YouTube/Google engineers designed an extensive API that enables a third party to create, externally, almost any user experience they can create on their own platform. Then Google lawyers made sure it wouldn’t happen.”

Look at the YouTube API gallery or watch this session from Google I/O 2009 and you’ll immediately notice that very few worthwhile external projects were created using the YouTube API.

YouTube/Google engineers designed an extensive API that enables a third party to create, externally, almost any user experience they can create on their own platform. Then Google lawyers made sure it wouldn’t happen.

Anything else you might want to add?

Yep, a little story, an observation and some musings.

The very first prototype of Totlol had an upload button and no YouTube integration. When it was done I contacted a content creator with a good YouTube presence and showed it to them. The response: “Great idea for a site” but “we have limited resources when it comes to distributing ... so our participation isn’t a sure thing.” They never uploaded. I contacted others and got replies along the same lines.

Then I had a sort of “Eureka! Moment”. YouTube’s platform is so valuable not because of the technical details, but rather because of the way it streamlines and scales many-to-many distribution relationships. If I ever wanted to make a site that aggregates successfully – I had to do it on the YouTube platform.

Fast-forward a year and a half and YouTube themselves are very into aggregation. It can be micro like MusicTuesday, mini like YouTube Edu or it can be full-scale like VEVO “to be launched later this year”. Either way control stays at YouTube.

Scroll this long interview up and down and I think you’ll see the same picture I’m seeing – video verticals are YouTube’s business. Moving into the future, no matter what your specific “vertical” interest is, you should hope that YouTube do a good job; Cause you ain’t gonna get it from anyone else.

I’m still wondering though if they ever are going to try and do a “YouTube for Kids”.

Ron Talks About Building ... by Philipp Lenssen | Comments (9)

>> More posts

Advertisement