YouTube

[floyd]

YouTube video policy takes on iTunes

 

Mark Sweney

Thursday August 17, 2006

MediaGuardian.co.uk

 

 

YouTube's plan to provide "every" music video free is a "nail in the coffin" of the paid-for online content business model and potentially threatens the dominant position of Apple's iTunes, according to City analysts.

The video filesharing website, where 100m clips are watched every day, is in talks with Warner Music and EMI to offer music video downloads for free. Revenue will be provided by advertising.

 

Apple has been the dominant driver in online music downloads because of its deals with record labels and the ease of use of the iPod and iTunes online store.

 

However, Apple uses proprietary technology that only allows its songs and videos to be played on its iPod devices, potentially limiting its long-term revenue potential.

 

According to Mark Mulligan, vice-president at JupiterResearch, YouTube's popularity means it could have the scale to create a free video-based music competitor to the paid-for downloads offered by iTunes.

 

"Any service that YouTube puts in place is, almost beyond reasonable doubt, not going to be iPod compatible," said Mr Mulligan.

 

"If they develop portability - and that should definitely be on the table - then Apple could be in the unusual space of playing catch up," he added.

 

"If YouTube can convert its massive online popularity then it could provide a significant reason for people to buy non-iPod devices, at the moment Apple is still the best bet for portable music watching.

 

"Either way it is a nail in the coffin of paid-for services as the dominant online model versus ad-funded alternatives."

 

Earlier this year, Apple renewed its deals with record labels. However, the record companies failed in their bid to get Apple to accept more pricing flexibility such as charging more for new releases.

 

Music download deals that the labels have with the likes of HMV and Virgin do have greater pricing options.

 

Mr Mulligan added that the new YouTube service was an example of how the fledgling company was innovating to stay one step ahead of Google's attempts to get into the online video market with the roll-out of its Google Video service.

 

YouTube's new free video service is likely to provide the stiffest competition for AOL out of the big internet portals.

 

AOL has concentrated more heavily on providing a rich music experience through video than rival portals Yahoo! and MSN.

[melia]

This post is not viewable to guests.

You can sign in to your account at the login page here

If you do not have an account then you can register here