YouTube: The new Napster
I love YouTube. I think it’s the greatest thing ever.
Just today I loved watching a famous baseball game re-enacted on the Nintendo. Last week I loved watching Texas Tech football coach Mike Leach do the weather on a Lubbock tv station (if you feel that you’re not in on the joke, check out this profile of him).
That said, I would not buy YouTube. I certainly wouldn’t buy it for $1.65 billion dollars. I’m not even sure I would buy it for $1.65.
Right now, the site reminds me of Napster. Just like Napster brought digital audio to the masses, now YouTube is doing the same with video. Formats like Quicktime and Windows Media are dying out because the YouTube flash player is insanely easy to use, keeps file sizes small, and works on just about every computer ever.
The problem is, the site’s popularity is based entirely on copyrighted content. Set aside issues with copyright holders, and you’ll still have a problem with amateur video creators, who aren’t going to send their videos to YouTube just to watch the site make big bucks off of them. Broadband pioneer Mark Cuban agrees, and adds that the lawsuit threat is huge now that Google, a company with deep pockets, owns the site.
So what’s the lesson here in advertising? Well, the best things are still free, but people are still willing to pay for quality content. The iTunes store proved that when it overtook Napster. The winner in the video wars will be a site that charges for the content, but offers it commercial-free and without viewing restrictions.
I’m willing to pay for the best content with no commercials. It’s not the greatest thing ever, but it’s pretty close.
Comments
You know, I think this does have the odor of a dot com bubble (do bubbles smell??? anyway...) and I think your comparison to Napster is credible. Is your larger point about how to make money on the internet (the assignment, after all) that the best way is to design the next new thing and sell it?
Posted by: Rick Musser | October 25, 2006 10:09 AM
Even after Napster was shut down, it sold its name to Roxio for big bucks. The concept of "buying eyeballs" is ridiculously overvalued right now.
To answer your question, yes, one of the best ways to make money right now is to sell the tantalizing whiff of future money. It's how Mark Cuban cashed in. The sites themselves are worth much more than the ad revenue they're generating.
Posted by: michael | October 25, 2006 10:19 AM
But such a "revenue model" is not sustainable over time. And that continues to be the problem. Even if YouTube would work, the intellectual property issues aside, how would it make money for Google?
Posted by: Rick Musser | October 25, 2006 11:04 AM
It is and it isn't (like Napster).
Napster, unlike YouTube and Google Video, allowed a user to download content. There is no way to download video from Google or YouTube (at least that I'm aware of). The difference: ownership vs. sharing.
The problem is how users are getting the content in the first place. Should Google and YouTube be held responsible for copyright violations committed by users? I don't know. I'm no copyright expert, but then again, neither is Mark Cuban.
Posted by: Steve Lynn | October 25, 2006 12:59 PM