YouTube?

The New York Times discussed yesterday the business model of one of the leading TV networks of this year: YouTube.

With about 100M clips per day, which represent I assume more than 50M viewers per day, YouTube is very close to the large American networks: NBC, CBS, ABC and FOX. The top rated show these days, American Idol, brings rating of 18% which means a little bit less than this number. YouTube brings this rating on different 100M shows, each clip – is a show of itself, and in different locations. But can the content industry ignore this TV network? I think not.

Mark Cuban claimed yesterday in his blog that YouTube is nothing more than just copyright violation. And he is right. Most of the user generated content in YouTube is stolen generated content – part of it from TV, part of it music lipsync which is stolen.

But the question is not whether YouTube generated their traffic by stealing copyrights. This is in the past. The question is what they will do with their traffic which is similar to the most viewed prime time show in US. It’s a lot of traffic which in the near future will be generating a lot of money from advertising. If the content industry will choose to take legal actions, they defiantly would kill YouTube. But will it be good for this industry? Imagine what would happen if instead of killing Napster, the majors would allow them to give music for free for a share in the advertising that Napster would sell. The piracy would have been stopped and record labels had been gained revenues from digital music for years. I-Tunes model won’t even been born.

The content owners should decide whether they mean war or they prefer peace. In war, everybody loses. They might succeed in killing YouTube, but a new one will emerge. In peace, they can use it as a new channel to the customers and a new stream of revenues.

And I won’t be surprised if YouTube’s next move will be becoming a player in the TV industry. They won’t be the fifth network, but they will become VOD player on the TV screen.

K.