Youtube vs Napster

Youtube and Napster have a lot of similarities. So how come Youtube succeeded whereas Napster failed?

As seen in many consumer web businesses, sometimes small difference makes all the difference. In the case of Youtube and Napster, it may lie in the following facts:

  • Music has always been sold as products (CDs)
  • TV programmes have traditionally been a service supported by advertising

This difference is important. Since music can never be supported with advertising (a short ad before a song? no way!), the music industry had to kill Napster as it directly impacted on their topline.

Youtube is more a complementary service. It has a lot of popular copyrighted TV programmes (like Daily Show) but that does not directly hit the TV programme’s ad revenue much. Media companies may see Youtube as another distribution channel for monetizing additional ad revenue.

But the copyright owners still hold all the cards. If they decide that they do not like Youtube after all, they may still kill it. Time will tell.

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