What YouTube can learn from Youku

July 19, 2012, 7:05 PM UTC

By Ryan Bradley, senior editor

FORTUNE — July 18 was an auspicious day for Victor Koo, chairman and CEO of Youku Inc., to take the stage at Fortune’s Brainstorm Tech in Aspen. His company, already the largest video sharing website in China (and one of the largest in the world) had just completed a merger with Tudou, China’s second largest video sharing site. Already huge, Youku Tudou Inc. is even huger. “In combined reach we cover 80% of the Internet video population in china,” Koo said. That’s about 400 million people.

(Click here for a full transcript and video of the conversation.)

While Youtube (GOOG) still reigns supreme as the world’s most heavily trafficked video sharing website, Youku and Tudou differ in important ways. An amazing 70% of Youku’s content is syndicated, that is, not generated by users. Tudou has even more syndicated content. (Indeed, it has been reported that in terms of sheer bandwidth Tudou might be the largest video website in the world, as its average video length is much longer than YouTube’s.) As Koo put it, “China never had an ‘America’s Funniest Home Videos’ equivalent,” so the culture of shooting videos and posting them online was slower to take off.

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While this may have slowed Youku’s growth initially, the company is further along than YouTube in its push for original and premium content. Koo says that while the bulk of their revenue still comes from advertising, they are already making money from video-on-demand and subscriptions. “We are at most 5 percent of the broadcast television pie,” Koo said. Still, for a six-year-old internet company to be playing on the same field as traditional broadcasters is somewhat astonishing.

Koo also said his company is developing independent and documentary films, and Ms. Puff, an animated series developed by Youku, is a genuine hit and in its fourth season. Original programing, he said, is “very important to our branding strategy.”

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