Friday, April 07, 2006

YouTube Tries to be Google. Will Get Napsterized.

I have to believe the folks at Google are smiling when they read this Business Week article on YouTube getting another $8 million of venture funding.

While YouTube remains popular, it has copyright issues and no revenue. Sound familiar? When's the last time you went to Napster for music?

YouTube's revenue solution is contextual ads. That's like me trying to make Revverberation an alternative to Oprah. Google's core competency is contextual ads, and Google has more traffic than anyone. The moment Google decides to ad a "video" search to its homepage is the day YouTube will be Napsterized.

Here's a distinction between the video scenario and the audio-sharing scenario. The copyright issues are similar, but I would predict that only 10% or less of online videos will move into a "pay for view" model that iTunes has popularized. The other 90% will be advertiser funded and free to watch.

For a bit longer, most of us will post to the site with the most traffic. I've got people telling me their MySpace videos get tons of traffic. My response- If I want to be popular I'll set up my videos on TimesSquare with a little monitor and a cardboard sign that says "watch my stuff for free." And a little collection hat that people can put money into (which I'll send off to YouTube each night).

This "popular" viral period will fatigue by the end of 2006. Suddenly the good content providers will choose to post their video content to places in which they can make money- and ONLY post them there. The result? The eyeballs will follow the content. Again- the eyeballs will follow the content. And the ads will follow the eyeballs. That's when Revver will explode and when you, dear Revverberation readers, will tell your friends you found it first.

As a final note to this unusually long post, I'll tell you a brief story about Nalts when he returned from Switzerland around 1984 or 1985 with his first "Swatch." For about 8 months, his classmates asked him if he got it from a gumball machine or a cereal box. Soon, there wasn't an arm at Jesuit High School in New Orleans that wasn't wearing one of 'em.


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