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Remember when MTV use to show your favorite videos?

Websites including Yahoo, Myspace and Youtube are using music videos and stealing MTV’s market share.

The music video strategy is a smart one for online companies, says David Hallerman, a senior analyst at eMarketer. After all, Internet advertising is a fast-growing market expected to bring in $16 billion this year alone, according to eMarketer projections, and advertisers particularly covet the teenage and young adult market.

Analysts say MTV can’t afford to be complacent. “Right now I don’t really view (competition) as a problem because MTV has an Internet presence and they are the main brand,” says Robert Routh, a managing director at Jefferies & Co. “Could it become a problem if Viacom doesn’t carefully monitor the situation as time goes on? Sure. If MTV continues to focus more on the television product, then it could become a problem. We saw that with AOL, which was the dominant player online for years. Now look at what has happened.”

Last week, MTV Networks purchased gaming site and online video outlet Atom Entertainment for $200 million (see BusinessWeek.com, 8/11/06, “I Want My GTV?”). Earlier this month, MTV’s college campus network acquired Y2M: Youth Media & Marketing Networks, a publisher of online college newspapers (see BusinessWeek.com, 8/3/06, “Viacom: I Want My Demographic”).

It has also acquired gaming sites Xfire and GameTrailers, along with indie film site IFILM. Last year, Viacom tried to acquire social networking giant MySpace, which also streams music videos from independent and major artists, but lost out to News Corp. (see BusinessWeek.com, 7/19/05, “News Corp.’s Place in MySpace”).

YouTube is handily beating nearly all of the traditional media outlets for traffic.

 

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