Adventure Capitalist

I was puzzled for the longest time why YouTube ended up dominating online video, while downloads languished, and the same thing seems to be happening again in online music: once dominant iTunes is getting challenged by streaming music from Spotify.

From an infrastructure point of view, this makes little sense: downloads can be made economically efficient through distributed downloads, CDN’s and client-side peer-to-peer distribution. At the same time streaming is hideously expensive, can you imagine the bandwidth costs of running a service like YouTube or Spotify? They are likely astronomical.

But there is a very simple reason why streaming beats downloads: the shareability and instant gratification of streaming and being able to link to streams. Compare sending a link to someone with sending a big file. Despite bandwidth getting cheaper and faster, sending a big file is still hard, cumbersome, non-instant.

Links trump files. Every time. Links work because the barriers of sharing are close to zero.