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Is YouTube the next Napster?

Filed in archive Business Trends , Internet TV by martino on June 30, 2006

Is YouTube the next Napster?
How do you get customers to pay for something that you've given away for free?

And that question leads us directly to YouTube and its business prospects. Josh Martin, an IDC research analyst, issued a report Thursday asserting that YouTube will struggle to squeeze profits from its video-sharing business, primarily because its audience has grown accustomed to paying nothing for the service.

The viral video sharing market is exploding in popularity and YouTube owns more than 40 percent of it. More than 13 million people log on to watch homemade movies that are uploaded by fans of the site every month. More than a year since YouTube was founded; executives have yet to roll out a business model. YouTube representatives have said the company will sell ads, which will be introduced slowly in coming months.

But I am not sure how that is going to work in any large degree.

One thing that agencies worry about in television is making sure that ads don't run in inappropriate shows. That is easily controlled in TV but YouTube doesn't prescreen or categorize its content which is a website that allows users to upload, view, and share video clips. Sometimes users post clips that include violence, nudity and sexually graphic images.

Recently someone posted a very popular clip after he came home and video taped a Comcast employee who was sleeping on the customer's couch, and posted it on YouTube. If you were Comcast, would you want your ad to air? If you were Disney would you risk that an ad would pair up with a sexual clip? You see the problem.

Josh Martin compares YouTube's challenge to that faced by Napster as it tried to transform itself from a free file-sharinglinks system into a paid-subscription service. "In the late 1990s Napster...achieved similar cult status but was quickly abandoned when it attempted to become a legitimate business."

Do you YouTube? Would you continue to do so if it became more corporate?


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Tags: YouTube  advertising  youtube  video  digital  youtube+next  next+napster  digital+shot 

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