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Summary:

Online video is the big story today… again. From CNN to AOL to Lulu.TV – everyone is talking about online videos, which begs the question – How many video sharing sites do we need. We had asked this question nearly a month ago in the pages […]

Online video is the big story today… again. From CNN to AOL to Lulu.TV – everyone is talking about online videos, which begs the question – How many video sharing sites do we need.

We had asked this question nearly a month ago in the pages of Business 2.0 magazine. The frenzy clearly has gone to the next level. Amazon has jumped into the fray. More money is being pumped into the sector. Revvr for instance is getting more cash from Turner and Comcast. You Tube founders dream of an IPO.

All this on a Monday morning, makes one want to scream: Stop the madness!

Forget the video sharing sites for a minute, and instead lets focus on the pro-video content market. That’s essentially television shows and music videos for now, but movies are around the corner.

If you include AOL’s decision to sell videos for $1.99, you can buy this “pro” video content from Google, Amazon, AOL, Guba, FOX, and Apple along with scores of other sites. This content is mostly for PC viewing, though it will work on portable devices, such as iPod and Sony PSP.

This is reminiscent of the digital music market, which is chockfull of players with marginal market share. Apple’s iPod/iTunes dominates the market because it provides a stress free (some call it integrated) experience for the end user.

One stop shopping is a powerful concept, and as we see more and more “online video sales outlets” pop up, there is more than likely chance that consumers are simply going to gravitate to a stress free experience. This is precisely what Apple wants, sort of: now that you have tried the rest, how about just sticking to the best.

And as for the amateur video sharing sites… you don’t really need it spelled out.

  1. Jesse Kopelman Monday, July 31, 2006

    It seems to me there is a need for BMI or equivalent that negotiates and collects fees from You Tube and the like for the use copyrighted material. Instead of somehow thinking that they can stop piracy, the MPAA and RIAA should realize that there is a great deal of money to be made by letting the customer do what he wants and collecting pennies here and there. While some people like the thrill of the chase and will go to any lengths to get the forbidden free stuff, most will pay a little for convenience and quality — especially if the tariff comes in the form of being subjected to advertising.

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  2. Your link to CNN is actually to the lulu article. I found a story at ZDnet about CNN Exchange.

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  3. Erik Schwartz Monday, July 31, 2006

    Apple’s iPod/iTunes dominates the market because it provides a stress free (some call it integrated) experience for the end user.

    Apple also doesn’t care if they make any money on the music store.

    They make their money by selling iPods at 60% gross margins not music tracks at 12% gross margins.

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  4. Even though we have so many video sharing sites but none of them are working to provide those content on the TV as far as I know.

    To me, unless people can watch those videos on the TV it’s hard to monetize it. Here, I’m not exactly talking about the IP TV, but to buy and organize videos at home and streaming it to TV.

    Still, I can do it using Home Media Server but to average user it’s much work. Let’s hope someone will provide these integrated solution.

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  5. “Apple also doesn’t care if they make any money on the music store.

    They make their money by selling iPods at 60% gross margins not music tracks at 12% gross margins.”

    I disagree: Apple cares about profits with all of its products.

    They make 20-30% net margins on iPods and a small profit on the iTMS. Apple got the iTMS profitting (even if negligible) in less than a year; no other store has done so.

    Apple knows that the device market can change and the iPod profits may not always be there. The media will. Apple can fully foresee the future where the store is more important (and profitable) than the device.

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  6. It does seem like the explosion of video hosting sites helps to validate the new generation of services that can aggregate video from multiple sources, such as Dabble and DemocracyTV/VideoBomb.

    At Magnify.net, we’re building a service that combines this concept with a targeted channel model, so that anyone can create their own site that re-aggregates topical videos from various hosting sources — with so many sites hosting video clips, the best videos on any subject you’re interested in are likely to be scattered across the Internet, so Magnify provides a way to gather them together and share them with a more focused community.

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  7. [...] cable and phone companies that are betting big on the video-on-demand as an engine of growth. The strategy is typical of Apple: it lets the market reach a point of confusion, and then starts offering a service that emphasizes [...]

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  8. [...] divided attention Quote of the day from OM: The strategy is typical of Apple: it lets the market reach a point of confusion, and then starts offering a service that emphasizes [...]

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  9. Well, Apple may have tried to take the online videos market share back then, but now, three years later, its basically a Youtube dominated online video market. However, to this day, Youtube has failed to profit yet and they may never do it, so, IMHO, overall, the market is still wide open.

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