Israeli start-up Metacafe Inc. is giving out money. In the past six weeks, the company has distributed $100,000 to the users who created the most watched content they uploaded onto Metacafe’s video website.
Metacafe, founded three years ago, developed and manages a video-sharing website where video files can be exchanged for free. The files are rated and filtered in advance by the company’s engine, as well as by users. The company focuses on rating, collating, and distributing video clips. It has raised $20 million from Accel Partners and Benchmark Capital.
Metacafe was founded by Eyal Hertzog and Ofer Eldar (co-founders of IncrediMail Ltd. (Nasdaq:MAIL)) and CEO Arik Czerniak. “Globes” and Ernst & Young ranked the company as Israel’s third most promising start-up in September.
Metacafe considers itself a competitor of companies such as YouTube, which Google Inc. (Nasdaq:GOOG) acquired last month for $1.6 billion, Efilm and heavy.com. Metacafe is giving out money on the same week that Google announced the allocation of $200 million to cover YouTube’s legal costs for copyright infringement charges.
The distribution of money to users is part of Metacafe’s business model. Two months ago, Czerniak said, “People think it’s fun, and don’t realize that this is a completely new field of entertainment. There are now clips of no more than two minutes in length. This is a new generation of Internet entertainment consumption, and it will be on mobile devices in the future, and we’ll supply the content. Whereas we had 1.5 million pages viewed every day a year ago, we now have 450 million pages viewed a day. We’re one of the 100 most viewed websites in the world. Over 100 million people use this content every day. But the industry is lagging behind the phenomenon, and there are no successful business models for it. When people download a ringtone, for example, they pay for it.”
Metacafe initiated its user compensation model six weeks ago. The company’s website states the rules: Users can upload their copyrighted clips, and will get $5 for every 1,000 viewers, after 20,000 hits.
In addition to paying users, Metacafe today announced that it will collaborate with US television series producer Steven Bochco (“NYPD Blue”, “LA Law”, and others). Metacafe and Bochco did not disclose the nature of their collaboration.
Czerniak said, “People think that online video is at a peak. I think it’s just beginning.”
Published by Globes [online], Israel business news - www.globes.co.il - on November 16, 2006
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