Saturday, April 07, 2007

Is YouTube simply the Napster of video?

The problem for Napster, other than its serious legal challenge, was that it had no revenue model... and that any attempt to make money was doomed by.... drum roll please, the concept of Napster itself.

No matter what business model Napster tried to go with... subscription, per download fee, advertising... it would be undercut by the next Napster coming along to offer free downloads to users without the cost or hassle of dealing with ads (think of the competitor's tagline: "Company X, the way Napster used to be...

It didn't matter how many users Napster had, as Napster itself had shown, the public would flock to a service offering free downloads. Napster, unlike Apple with its IPod, had nothing that locked users into using the Napster service. Thus, as soon as Napster tried charging users even the smallest amount of money to download songs, the users would gone elsewhere.

And the same holds true for YouTube. All YouTube is is a catalog of videos... and just as soon as they try to start making money - whether by charging to view, charging to post or making viewers have to sit through advertising - they become vulnerable to the next YouTube which wants to offer users a hassle-free environment for watching illegal clips of copyrighted material (VeeTube, the way YouTube used to be. Like Napster, YouTube has nothing to lock either viewers or those posting the clips onto YouTube into continuing to use YouTube. Viewers and posters alike are free to go elsewhere... and as soon as YouTube tries to institute a revenue plan, they will.

So tell me again, just what did Google get for diluting their stock to buy YouTube? Other than hype, of course?