YouTube to Kill Apple iTunes?

[musicradio77]

By Christopher Hogg

Digital Journal — There’s not very much that can shake the power of iPod or iTunes. That is until YouTube co-founder Steve Chen says he wants to have “every music video ever created” on YouTube.com within the next 18 months. Then, anyone that works for Apple is no doubt going to start their morning with a spew of profanity.

EMI, the British music group behind Coldplay and Gorillaz, says it is now in talks with the Web TV giant to host music videos and other content on the popular social networking website.

YouTube, which has about 20 million monthly visitors watching more than 100 million videos every day, has confirmed it has held discussions with a number of record labels in a bid to enrich the site with videos. Warner Music Group, the music moniker that was involved in a takeover battle with EMI earlier this year, also says it is in talks with the site.

If YouTube gets its hands on “every” music video, it marks the beginning and end of music as the world knows it. Without more content changes (please no crappy reality shows) channels like MTV and Canada’s popular MuchMusic are going to have to start taking longer summer vacations.

But this news is a lot bigger than MTV: A free YouTube music video service will end the paid-for content business model and will trip iTunes until it falls flat on its face. Numero uno no more.

With YouTube music video revenue set to be provided by advertising, Apple’s dominant position in the online music download scene will be dramatically changed. The company has developed incredible relationships with record labels, but that ain’t going to save their hide — unless Apple goes free or comes up with a new gimmick.

To further complicate Apple’s problem is its technology: Apple uses a proprietary file format that forces its iTunes content to be played on iPod devices. In the long term, this could seriously hurt revenue potential as services like YouTube use much more widely available file formats like Flash video — supported by every Internet browser.

Mark Mulligan, vice-president at JupiterResearch, told the Guardian Unlimited that YouTube likely has the best chance of becoming a free, video-based alternative to iTunes.

“Any service that YouTube puts in place is, almost beyond reasonable doubt, not going to be iPod compatible,” Mulligan said. “If they develop portability — and that should definitely be on the table — then Apple could be in the unusual space of playing catch up.”

Right now, YouTube also holds the powerful position of being able to potentially launch a competitor to the iPod, as many have come and failed to reach the same level of success.

For example, if a company like Microsoft were to buddy-up with the service and launch its upcoming Zune player to be totally YouTube-compatible, there would be an instant competitor for iPod. If no one company makes a deal with YouTube exclusively, there could potentially be dozens of iPod alternatives.

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

Earlier this year when Apple renewed its deals with record companies, it was able to hold back the wolves from charging more for certain content like new releases. Now, it might be forced to come up with a new model all together.

YouTube’s desire to get music videos, and its current deals with other companies to host trailers and network TV teasers, is a perfect example of the steps YouTube is making to try and stay ahead of the hundreds of video sites that popped up overnight, craving to get a piece of its lucrative pie.

This news also steps all over Google which has aggressively pursued online video, and AOL which has spent millions of dollars and a lot of time to develop a rich music video experience.

[thatartguy]

Competition is always good for the consumer.

[Fflewduur]

Do people still watch music videos anymore?

If only there were some simpler way for people to get their entertainment...like a television network that broadcast music videos...a "music television" network...

[DaveWadding]

If only there were some simpler way for people to get their entertainment...like a television network that broadcast music videos...a "music television" network...

What a GREAT idea. Shame it's so out there you look like a nutjob.

[BrandonH]

I've watched a few videos on YouTube, and the video quality has always been pretty shabby. Unless that changes, I think Apple will still have the advantage.

[Pluto Region1]

YouTube, which has about 20 million monthly visitors watching more than 100 million videos every day, has confirmed it has held discussions with a number of record labels in a bid to enrich the site with videos. Warner Music Group, the music moniker that was involved in a takeover battle with EMI earlier this year, also says it is in talks with the site.

But this news is a lot bigger than MTV: A free YouTube music video service will end the paid-for content business model and will trip iTunes until it falls flat on its face. Numero uno no more.

With YouTube music video revenue set to be provided by advertising, Apple’s dominant position in the online music download scene will be dramatically changed. The company has developed incredible relationships with record labels, but that ain’t going to save their hide — unless Apple goes free or comes up with a new gimmick.

Thanks for posting Musicradio77....

TYou Tube is gambling that they'd have enough onsite advertisers to pay for all the content being downloaded and it sounds like how they are going to deal with this, is somehow guarantee a percentage to record companies. Over at Itunes I would imagine record companies are getting a per-song percentage.... I think they are going to prefer the Itunes model over accepting You Tube's word on how much is being made and what percentage they are due.

To further complicate Apple’s problem is its technology: Apple uses a proprietary file format that forces its iTunes content to be played on iPod devices.....

Right now, YouTube also holds the powerful position of being able to potentially launch a competitor to the iPod, as many have come and failed to reach the same level of success.

For example, if a company like Microsoft were to buddy-up with the service and launch its upcoming Zune player to be totally YouTube-compatible, there would be an instant competitor for iPod. If no one company makes a deal with YouTube exclusively, there could potentially be dozens of iPod alternatives.

There ARE dozens of Ipod alternatives now and who cares? Ipod is selling an IMAGE and that is very hard to compete against. I don't think it will knock out Ipod or significantly make a dent in Ipod's loyal fans.

Itunes has improved their policies on allowing you to copy over your purchased music that's in their proprietary AAC format... But even better, they are hosting files that are in the "universal" MP3 format: All of the podcasts which I get off of Itunes are in MP3 format (and free); they just don't support WMA files.

BTW, I think You Tube is a great website and its like a "myspace" but with videos... but I think when music companies look at how many people are buying Ipods they will continue to play ball with Apple.

[satas]

I tunes makes their money of the songs and taking them with you. Even though some ipods play video, their main use is just the songs, you tube doesnt do that...Sure apple sells some videos , but its a small percent of their bussiness

[Fflewduur]

Video is a small part of iTunes's business? I wonder...

I mean, sure: their content is meant to be viewed on something a fraction the size of your average widescreen HD TV, but when you look at the networks now offering full, commercial-free programs on iTunes for only twice the cost of a song---ABC, NBC, CBS, Fox, plus a big fat stack of cable networks---it makes me wonder.

Personally I think the conglomerates that <i>are</i> our media owe Apple a debt of thanks for providing a business model which proves you can make mnoey selling content in an age when virtually anything can be had for free (if you don't count the cost of the computer & high-speed connection). Some other company <i>could</i> have done it...but Apple actually <i>did</i> it, and that decision has played a huge role in keeping them in the marketplace when they could have been rolled over by the behemoth that is Microsoft; it's not <i>just</i> an image they're selling.

Considering how much of the content on YouTube constitutes copyright infringement or theft of intellectual property, it seems to me they'll have to do a lot to reinvent themselves before anyone with the bottom line in mind will seriously consider jumping into bed with them. Exactly how is anyone supposed to make money by giving music video away for free? Heck, it's all a bunch of crap anyway. I'll pay for a good song, but unless they get into distributing full concerts or something...I wouldn't have any of it taking up space on my hard drive.