In part three of How YouTube Ate TV, Fast Company’s oral history of YouTube, new parent Google confronts the messy issues standing in the way of the video streamer’s long-term viability. As Viacom sues over YouTube users’ unauthorized uploading of intellectual property, Google and YouTube engineers simultaneously build technology that will save the business. Called ContentID, it lets copyright holders remove their work—or, better yet, leave it up and benefit from its monetization.

YouTube also sets viewership goals that are even more wildly audacious than the ones it’s already achieved. First, though, Google has to convince even its own employees that buying the video-sharing service hadn’t been a horrible mistake.

Comments have been edited for length and clarity.

Read more ‘How YouTube Ate TV’

Part one: YouTube failed as a dating site. This one change altered its fortunes forever

Part two: Pit bulls, rats, and 2 circling sharks: The inside story of Google buying YouTube

Shishir Mehrotra, YouTube chief product officer/CTO (2008–2014): The general perception inside Google was that [buying YouTube] was Google’s first mistake. Every previous acquisition had worked out so well: Android and Google Maps, and even Google Docs was off to a reasonable start. But this one didn’t seem like it was going anywhere.

Matthew Darby, YouTube director of product management (2008–present): I remember giving a talk to my team about, like, “How the hell is YouTube going to make any money for Google?” There was this odd thing going on in San Bruno and it was costing a great deal of money, because video is an expensive thing to serve.

Mehrotra: About a month after I joined, we went to see Patrick Pichette, who was the CFO at the time. He had these three charts. The first said, here’s how much money YouTube is losing. It was hundreds of millions of dollars. The second said, here’s how much money YouTube loses per view. It was just under a penny. And the third chart showed viewership. It wasn’t just up and to the right, it was a straight line. He said, “This is the worst business on the planet.” Thankfully, [then-Google CEO Eric Schmidt] was in the room. He kind of laughed and said, “No, no, no—don’t listen to Patrick. You guys have time. Go figure it out.” But it was very clear that we were on a clock.

Outside Google, media companies and marketers alike remained skeptical about partnering with YouTube. Viewers also weren’t wild about the prospect of marketing intruding on the experience.

Michael Fricklas, general counsel, Viacom (2000–2017): Google’s a big, responsible company, and the thought that it would be acquiring a site that we viewed as a pirate site was considered, at best, bad form. We thought big, responsible companies would behave in responsible ways.

Chris Maxcy, YouTube VP of business development (2005–2013): [Media] companies that had been collaborative with us shifted and said, “Now we can’t [acquire] you, so we’re going to try to shut you down.” Or “Now you have a really, really large parent with lots of money. It’s time for us to extract some.”

Amy Singer, YouTube development, partnerships, strategy executive (2010–present): [Media companies] wanted to manage their distribution ecosystem, and so there wasn’t a lot of reception to working with YouTube.

Ian Hecox, cocreator (with Anthony Padilla) of the comedy duo Smosh: The Logitech deal [in 2009] was probably our first big brand deal. The audience hated that we did sponsored videos back then.

Suzie Reider, YouTube CMO (2006–2013): There were marketers who saw it as such a creative marketing platform. I remember the first million-dollar program that we sold was a battle of the bands. We had a wireless company sponsor it.

Some marketers were willing not only to use YouTube, but to embrace its spirit, such as the ones responsible for promoting the 2007 film Hairspray.

Russell Schwartz, New Line Cinema president of theatrical marketing (2001-2007): When Nikki Blonsky was awarded the role of [Tracy Turnblad], she was working at a Baskin-Robbins on Long Island. We brought in a camera crew and told her, in front of all her peers, “You’ve got the role.” It was the most emotional thing I’d experienced. What better content do you need for YouTube than that? Once we realized the response to the piece we put up, we said, “Well, this is a place we have to be.” 

Reider: And then there were a lot of folks who were resistant to it.

Tara Walpert Levy, Google ads director (2011–2021); VP, Americas at YouTube (2021–present): It was my job to bridge Madison Avenue and Silicon Valley, to explain this new platform that looked and sounded like TV but had a lot of differences from TV. That was a hard pitch.

Reider: Procter & Gamble and Unilever were saying, “We’re not touching it until you have the right brand safety mechanisms and control in place.”

In March 2007, YouTube faced its greatest legal threat when media giant Viacom (now Paramount) sued it for $1 billion for copyright infringement by its users. But YouTube prevailed in 2013, establishing protections for itself and other online services yet to come.

Zahavah Levine, YouTube general counsel, chief counsel (2006–2011):   Viacom argued that YouTube was responsible for all of the copyright infringement of its users, who, it alleged, uploaded over 150,000 clips of Viacom-owned programming without authorization, which had collectively been viewed 1.5 billion times. This was it—the existential lawsuit we all knew was coming.

Fricklas: We sent this notice saying, “Take down our stuff.” And [Google general counsel Kent Walker] sent a letter that said they had no responsibility. We decided we really had no choice but to bring litigation.

Levine: It got worse. Shortly after Viacom sued, at least two class actions were filed against Google. One class represented sports leagues and music publishers, and the other represented “all copyright holders in the world.”

Even as YouTube battled Viacom, it was developing Content ID, a fingerprinting technology designed to identify copyrighted material and allow owners to decide what to do with it.

Robert Kyncl, YouTube chief business officer (2010–2022): During one of our first meetings, Eric Schmidt said, “Can you figure out how to stop them from sending us paper?” Meaning lawsuits. “And instead, we send them paper.” Meaning money.

Levine: With Google’s substantial resources and top talent, we developed the copyright management system that YouTube has in place today.

Kyncl: The first step was getting [media companies] to embrace Content ID and use it to block content [from appearing on YouTube]. And then, “Now that you’ve got the hang of this, how about tracking it, so you see what’s happening with your IP? And then, “This IP is doing well. How about turning on monetization?” Many did and started to make money.

Lyor Cohen, Warner Music Group CEO of recorded music (2004–2012); YouTube and Google global head of music (2016–present): Content ID is the unsung hero of YouTube. It was absolutely the most brilliant and critical decision that our leadership has made.

Fricklas: It’s a tough case to win in court that once they had Content ID in place, that [YouTube] was generating a lot of copyright damages. They could say, ”At least they’re not willful.” So we narrowed our lawsuit to focus only on what happened up until Content ID.

Mehrotra: The reason we won the case was that it turned out there were a bunch of Viacom marketing people uploading clips. They had figured out that it was a good way to drive attention to [Daily Show host] Jon Stewart.

Levine: This just underscored that there is no way for YouTube to know who uploaded each video and whether they are authorized to do so. Viacom appealed, and the appeals court overturned a small part of the district court’s decision, but affirmed most of it. The case was sent back to the district court, which again ruled in YouTube’s favor, and the parties eventually settled.

Fricklas: We needed to operate in the world of YouTube. Google was selling our ads—they had bought DoubleClick. They were buying movies from us for distribution on their devices. They were just so big we needed to normalize our relationship with them.

As YouTube’s legal woes receded into the past, it could concentrate on building out its advertising-based business model.

Reider: When were in the original offices with Chad and Steve, there was a lot of discussion about how we were never going to run pre-roll ads.

Kyncl: Shishir did many things, but I would credit him with the most important thing, which was skippable ads.

Mehrotra: I had written a paper. During the Super Bowl, the commercials are actually quite good. And you pause and you rewind and you watch them again. And I said, what if every commercial was good enough to pause and rewind and watch again? Why don’t you put a skip button on ads, and then when people don’t watch, don’t charge the advertiser and create an incentive to create better and better ads?

Kyncl: Everybody was like, “That’s stupid. Everybody will skip the ads.” And he was like, “No, not if you think of them as information, not an intrusion. And if you think of them as information. It means they have to be well targeted and you have to have a lot of them, different versions.” It was a big moment. 

The focus on advertising led to goals that were on a whole new level of ambition.

Kyncl: If you want to serve more ads, you need more impressions and more content. It was tied together.

Mehrotra: By 2011, 2012, we didn’t have any competition anymore. Nobody quite knew why we were doing what we were doing. And somebody told this story, which I think is folklore, about a famous Coca-Cola board meeting where somebody said, “Hey, are we just going to go back and forth with Pepsi at 60% share and 55% share, or is there something bigger we’re aiming for?” Someone else said, “How about we measure progress by percentage of the stomach—the liquid you drink that comes from our company?”

Darby: We had this goal that Shishir came up with.

Mehrotra: At the end of the day it was my decision, but a group of us came up with it. We were doing a hundred million hours a day of watch time. It turned out television was about five and a half billion hours a day. We said, “If we get to a billion hours a day, not only is it five times what Facebook is today, but it’s 10 times bigger than we are today. But it’s only 20% of television.”

John Harding, Google software engineer (2005–2007); YouTube engineering manager, director, VP (2007–present): We did the math of, okay, if we were to serve a billion hours of YouTube every day, here is what that would look like in terms of network consumption. And then we had another graph: Here’s what the internet’s total network capacity looks like over time. And at a certain point, those lines crossed, and we would be serving more traffic than the entire internet capacity was projected to be. And so, we had to go and say, “Well, what do we need to build?”

Jake McGuire, YouTube software engineer (2006–present): We knew that a lot of other teams at YouTube—the people making the features, the people getting the partners—were going to have to do their part. I don’t think that we doubted it would happen. We just weren’t sure when.

Mehrotra: When I left, in 2014, we had crossed the 400-million-hour line, but we were nowhere near a billion. I got a really nice call from the team when they hit it [in 2017].

Additional reporting by María José Gutiérrez Chávez, Yasmin Gagne, and Steven Melendez.