YouTube to take on iTunes and change business model of music

Stan Beer
Friday, 18 August 2006 19:17

Your IT - Home IT

Apple Computer's iTunes music download site has been credited with doing much to eliminate the free file sharing music piracy trade. However, social networking site YouTube threatens to undermine everything that Apple has worked for by introducing a new free advertising funded business model.

With an estimated 100 million page views a day (hard to believe we know), YouTube is not a force to be trifled with. What is now offering to do is put on its site every music video that has ever been made. What's more the videos would be free to both view and download to keep in perpetuity. And needless to say, you would not need an iPod to view and listen to them.

The whole thing, every single music video, would be funded by advertising which, as Google has demonstrated, is destined to become the only viable internet revenue model worth considering.

YouTube is reportedly in talks with Warner Music and EMI about providing a free advertsing funded download service.

All of this is bad news for Apple which currently controls the music download market. Apple currently controls the music download market, charging US$0.99c a track, which does not make music companies happy but hits a sweet spot with consumers.

However, the catch is that consumers who use iTunes are locked into the iPod as a portable music player, although they can burn the tracks to CD or listen to the tracks from their computers.

YouTube threatens to undercut all of this by making music tracks legally free for the first time in history, funded by advertising, and available for download to any portable music player.

If YouTube is able to pull this off, then it could change the business model of music sales forever.