It has become a popular debate among media observers: is viral video sensation YouTube just a flash in the pan? Research firm IDC seems to think so. Analyst Josh Martin issued a report Thursday
affirming that YouTube will continue to struggle, extracting profits from its video sharing business--primarily because its massive user-base has grown accustomed to not paying anything, and not being
forced to view ads either. Any moves by the company in either direction could result in a user backlash, Martin said. "In order to begin addressing its issues, YouTube must implement myriad changes,"
he wrote in his report. "The truly difficult task for YouTube is to change the entire culture of the viewers that propelled it to overnight success." The big thing YouTube has going for it is a
growing base of 13 million unique users a month--which gives YouTube a 40 percent share of the video market. But despite its big numbers, YouTube has now been around more than a year without a proven
business model. Company execs have said time and again that it will make money selling advertising--indeed, Martin said, that's its only option--but observers worry that ads could alienate users. They
also wonder whether it can persuade blue chip companies to advertise on the site (some of the content is a bit, um, suspect. Yesterday, the
Journal reported that YouTube plans to introduce a
Google-like system where it would split ad sales with content makers. But the recently announced cross-marketing deal with NBC "isn't what YouTube fans want," says Martin. They don't want promotional
clips of new shows; they want SNL's greatest skits, or at least some of them, says Cnet--which Martin points out isn't in anyone's interest but the consumer's to provide.
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