Will YouTube get it right?

Internet is something amazing. One day (early 2005) you are trying to figure out how to share videos with your friends, the other (mid 2006) you own a service that delivers 100 million videos per day. Chad Hurley and Steve Chen (YouTube founders) might not be as rich as Sergey Brin and Larry Page, but they are certainly trying to reduce the gap. It all comes down to whether they will be able to create a solid business model around the terabytes of video YouTube is “singlecasting” every day.

One direction they could go is the creation of live channels. Right now you watch one video and after 5 minutes you need to search for something else, wasting time and clicks. Imagine if you could select a theme channel, say YouTube Comedy, and receive streaming content created with the top rated videos on the database. The channel could be presented and commented by someone, and it could even feature advertising breaks.

Not traditional television advertising, of course. YouTube delivers video through IP (Internet Protocol), meaning it creates a bidirectional connection with the user as opposed to the unidirectional connection TV broadcasters use. The result is that YouTube should be able to collect some information regarding the end-user and target advertising much more efficiently. Put that mix together, create a good variety of channels (YouTube Comedy, YouTube Sports, YouTube Cartoon, YouTube Music, and so on) and you get what could be the initial point for a good revenue generation model.

Internet video services are spreading like fire these days, you have Veoh, Revver and Gotuit just to name a few. Each of them is trying to develop a unique mix of features and user experience to affirm itself as the dominant standard. That said I still think YouTube has an significant advantage on its side, the huge user base it managed to build over the last months. Should they leverage it with the right approach the other players will be forced to migrate to niche segments. Time will tell.