A New Video Age

In just about a year-and-a-half, YouTube has become the biggest website on the internet. Each day 65,000 videos are uploaded to the site. One hundred million videos are streamed from the site everyday. It’s an amazing service – easy to use both as a watcher and as an uploader. People are adding video of every kind, from things they’ve shot themselves to current TV to classic videos. Video is finally getting the digital revolution that came to photo sharing with flickr a few years back and music six or seven years ago with Napster.
Of course the popularity of the site means that producers of video will have to rethink their business models. The music industry blames downloading for the downturn in CD sales and has been energetically suing its customer base. There are signs that the same might happen with video. Last week Universal threatened heavy legal action against the video sharing sites. But then this week, Warner strides boldly into the future, announcing a deal with YouTube to offer free video. The site will be ad supported.
It’s an interesting move, one that suggests lessons learned from the music downloading experience. Free is the primary currency on the internet, and people are used to getting much for nothing. Successful companies such as YouTube or MySpace are able to gather enormous numbers of loyal fans who incorporate the websites into their daily lives. Those millions of visitors are worth something. We’re still in the early stages of learning how to make money on the internet, but one thing has proven consistent over time: more people = more money.
Of course, iTunes has proven there’s a business model that works. And already companies are finding that video can be successful in the iTunes model.

Walt Disney CEO Bob Iger said that Disney has already sold 125,000 movies on Apple’s iTunes store. Disney just began selling films from its movie library on iTunes last week. Iger said the downloads have generated $1 million in revenue already and that movie downloads could easily generate $50 million in sales a year for Disney. “We believe this is just the beginning,” Iger said.

Of course, then there are the failures. Napster, which kicked off the downloading phenomenon, is nearly out of business a struggling to find and buyer for its pay service.