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Youtube's Challenges

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YouTube's challenges

1. Another Napster?

A few years ago Napster was the premium website for sharing music on the internet. However, it violated copyright law and hence ceased to exist. There is a very real possibility that this could happen to YouTube as well. YouTube has taken steps in this direction trying to convince media companies that it is a viable business partner. It has made deals with recording studios and television companies like Warner Brothers and NBC. One reason for this trend is that most media companies recognize that the Napster suit was counterproductive, as the number of peer to peer file sharing services since that time has increased exponentially. Even so, it is not clear if YouTube can continue to operate as it currently does. As Mark Cuban, an internet entrepreneur suggests, if YouTube uses just authorized content "it could possibly survive, but there would be so many restrictions it wouldn't be the YouTube we know today."(1)

2. Unproven revenue model

YouTube currently has a large and dedicated viewership, but it has no idea how to monetize this viewership. In fact none of the various actors, the content providers, the distributors or YouTube itself have hit upon a revenue model which would distribute the revenue pie.(2) Since YouTube's popularity is in the main part because of the free content it offers, it does seem difficult to convince users to pay for viewing videos. It has also been suggested that the YouTube adopt a "pay and publish" model where users are charged a fee for posting videos. (1) But developing and sustaining revenue model remains YouTube's biggest challenge.

3. Advertising difficulties

YouTube has started to place banner advertisements on the website. But since there are Ad-blocking software and browsers like Mozilla available which block popup ads, it is a difficult model to implement. Additionally YouTube videos can be placed by users on their own sites, where the ads would not be visible. It has been suggested that YouTube could embed advertisements in its videos, although this has not been well received by users. Since YouTube is a community, founder Chad Hurley says that "they don't want to bombard people with advertising."(Sauer) In effect YouTube is still searching for the right mode of advertising.

4. Competition

YouTube has been enormously successful, mostly because of its simplicity, ease of embedding videos and the fact that it is Operating system independent. All of this makes it very easy for users to share videos. This has spawned a huge number of YouTube imitators. It is still not clear how YouTube is going to



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