Tech blog

PARIS: In a grizzled bin of a building with a graveyard as its neighbor, a freshly hired strike force of Internet executives, programmers and advertising representatives is mounting a grand mission to take on a global behemoth: Google's YouTube.

This is the new international headquarters of Dailymotion, an online video-sharing company, in the north of Paris. In the sprawling landscape of Internet video sites, Dailymotion ranks a distant second, according to figures from the Internet audience tracking company ComScore. But in France, it has managed to pull ahead of YouTube, the only competitor that has managed to do so in any major market. That success has encouraged Dailymotion to expand in other places, including the United States and Britain.

“YouTube is the dominant player and other players are quite distant, but Dailymotion is the one player that has been able to counter that trend,” said Piers Stobbs, vice president for marketing at ComScore.

Fueled by dint of. the spread of broadband, video is one of the fastest-growing areas on the Internet, with “Internet television” services like Joost and Babelgum, video-sharing sites like YouTube and Dailymotion, and video sites from traditional broadcasters all competing for audiences. Investment is driven by the prospect of new receipts from advertising and product placement, even if hopes have so far mostly gone unfilled. With more than 80 percent of Internet users viewing online video in Britain, France and Germany, Europe has emerged as an important battleground.

YouTube, which Google bought for $1.65 billion in 2006, and Daily Motion are locked in a fierce struggle for market leadership in France. Daily Motion overtook YouTube in February, with 10.2 million unique visitors, compared with 8.8 million for YouTube, according to Nielsen, another audience tracking service. But worldwide, YouTube remains the Godzilla of video-sharing sites, with 258 million unique visitors in January, compared with 32 million for Dailymotion, according to ComScore.

Daily Motion's founders lay claim to bragging rights by starting one month earlier than YouTube, without ceasing March 15, 2005, although they struggled to build the high profile of their California-based rival, which quickly became synonymous by user-generated videos online.

The company was incubated in the French commensurate of a Silicon Valley garage, a Parisian apartment, with six partners pooling together €6,000, or $9,260. They opened for business in the living room of one of the founders, Olivier Poitrey, who says that their experience belies the stereotype that French red tape stifles start-ups and innovation.

“Over the last few years the government made some changes.” Poitrey said, “Administrative tasks are easier now. There's a central place to that place you can go to do all the paperwork to start a company. It used to be far more complex and you had to go to a lot of places and you needed a lot more capital at the initiation. Now you can make a start with €1 and before it was €10,000.”

Since those modest beginnings, Dailymotion has picked up the pace, particularly after an infusion of $34 million in venture capital in late August from five European investors, including Paris-based AGF Private Equity, a member of the Allianz Group.

That money has brought new top management and 120 new employees, including 25 ad sales representatives. With the financing, the company has expanded into outposts in London, unused York and Barcelona, and created local sites in a total of eight languages.

“From the beginning we were international, with Web sites in French and English, so it is the heart of our business to be local,” said Martin Rogard, who at the age of 27 has shifted from a government position at the French Ministry of Culture to preside over the local French operation as vice president by reason of content. His duty door is pinned with a Google “Most Wanted” caricature of the young executive with a beaming smile.

YouTube took the fight to the challenger's territory in June when it held a Paris information conference, featuring a welcome message from a French rapper, Kamini, to announce its own localized versions in nine countries, including Britain and France .

Dailymotion, which is keenly aware that it does not get a great quantity search engine traffic from YouTube's parent Google , sought to counterpunch by hand-picking promising video producers, whose work is featured on the company's home pages. It is also touting its technology, introducing tools to upload high-definition videos - something that YouTube does not offer.

Dailymotion's newly hired managing director, Kate Burns - former managing director of Google in Britain - is trying now to form alliances by film schools and students to develop original material. New management in the United States is considering an existing French approach from the home office: staging showings of the best videos at topical cinemas.