What Apple is in the process of doing is controlling the media purchase market. The problem for every other entrant into this market is the same as the problem that confronts every new web site that decides to compete with Amazon. The Internet buying habit is driven by consumer confidence and habit. Most people who install iTunes buy something eventually. They quickly learn that buying is pretty much effortless and eventually it becomes a habit.

Taking myself as an example, I’ve bought about 100 items from iTunes, including about 8 videos—all music videos which cost no more than TV programs. I will probably buy movies from the same source. If I was into games, I’d probably do games too. What is so convenient about iTunes? The same program which provides me access to a media store also manages my media.

How do you break this grip?

The only answer is do the same thing much better. That’s a tough nut to crack.

But there is an alternative. The alternative is to give the content away and make money from inserting ads in the content. This is the strategy that is being pursued by NBC (owned 80 percent by GE, 20 percent by Vivendi Universal). NBC has set up a syndicated operation called NBBC (in the hope of confusing everyone in the UK)—NBBC stands for National BroadBand Company. The idea is that web sites, content creators and NBBC team up to place videos and share the ad revenue. Other broadcasters, ABC, Bravo, USA, Comedy Central, even the BBC and Channel 4 could make their content available (Fox and CBS have already signed up). So think like this; US TV ad revenue is about $60 billion. If you get even a small piece of that, you have a business.

All that needs to happen is for people to start playing TV programs (or other content) from the web. Not much of this happens now, aside from Apple’s success, because it’s not easy to go from web page to TV screen. Most people only play shorts on their PCs/Macs. If they want to watch a whole movie they cut a DVD and put it in the DVD player. If the NBBC model works it will have established a kind of Google AdSense operation. Google, Yahoo and YouTube may be inclined to do something similar.

So how would this stack up against the Apple Juggernaut?

Hard to say until it gets going, but there’s a potential fly in the ointment. Surely some software will eventually appear which strips the ads from the video. If so you’ll never be able to know for sure that an advert played.