No doubt you've already heard that Apple will not be including its native YouTube app in the next version of iOS that will officially launch this fall. Apple said its license for YouTube, which it held since 2007, when the iPhone launched, has expired. From my vantage point, this seems like a rare win for all stakeholders: YouTube, Apple, iOS users, YouTube's content partners, advertisers and even other video content providers.
For YouTube, taking back control over its app is huge. YouTube can now create its own app and deliver the user experience it wants to. That means not just presenting content in a more user-friendly manner, but being able to monetize it effectively with ads. YouTube has been very innovative with different ad formats (including ad-skipping), but, given the Apple iOS license, it has been precluded from deploying ads to the massive Apple app environment. And the better that YouTube monetizes its app, presumably the more it will invest in it, in turn continually improving the user experience, and benefitting users themselves.
For Apple, an improved YouTube app is also a win. YouTube is the 800-pound gorilla of the online and mobile video worlds, and although there are other video apps, for many users YouTube is far and away the most important video destination. No, it's not pre-App Store 2007 any longer, when YouTube alone could demonstrate the power of video on the iPhone, but make no mistake, even in 2012 a great YouTube experience will still enhance users' perceptions of the new iPhone, which of course helps Apple. The icing on the cake here is that Apple will no longer have to support its mediocre YouTube app.
YouTube's content partners also benefit from YouTube having a great app on iOS devices. YouTube is by far the most important online video distributor and on its recent Q2 earnings call, it said that thousands of its partners are now making over $100K per year, which is pretty staggering. Despite all the talk of the "democratization of video" that online has engendered, YouTube is effectively a benign despot. Its recent investment of $100 million in original channels further underscores its role. YouTube's ability to showcase content partners in a high-quality iOS app will help their viewership, brand development and monetization.
Beyond YouTube's content partners, a strong YouTube iOS app is actually also beneficial for other video content providers. To the extent that YouTube helps users feel more comfortable watching video on mobile devices, they're likely to watch more of everything else as well. In fact this is the same role YouTube has played online. Mocked as they were, those cute cats-on-a-skateboard YouTube links that were endlessly emailed around introduced millions of people to the act of watching online video. These experiences paved the way for successes that followed: Netflix streaming, Hulu, VEVO, etc. YouTube educated online users and it will help do the same in mobile. In particular, TV Everywhere apps could be a big beneficiary of savvier mobile users.
Last but not least are advertisers. They care most about being where large audiences are watching high-quality video. As YouTube is already demonstrating online - particularly with its home page masthead ads - brands have come around and are embracing YouTube. A great YouTube app on iOS devices means advertisers will only be more compelled to have a presence. And just as YouTube educates users, benefiting all other content providers, to the extent it does the same for advertisers, other content providers will benefit from increased ad spending as well.
The original Apple license to create a YouTube iOS app was the right thing to do at the time. But times have changed a lot. And fortunately it seems like this particular Apple-Google split seems like a rare win for everyone involved.