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This is Celia Hirschman with On the Beat for KCRW.

While the record industry struggles with the difficult transition of selling expensive physical goods to selling low-cost digital files, the gaming industry appears to be heading towards the same fate. For the last 15 years, gaming consoles from Nintendo, xBox, PlayStation and Wii dominated with bulky, expensive systems and software. But as the New York Times reported last week, Apple Computers is quickly taking the gaming market by storm with their iPhone and iPod Touch. The iPhone and iPod Touch now have down-loadable gaming applications, many of which are free.

It's just one more stroke of genius from Apple Computers, using free and low-cost apps to lure casual gamers into buying a mobile phone or player.

One of the great ironies of finding this goldmine is that Apple seemed to stumble on it by accident. Steve Jobs admitted they were unclear how to initially market the iPod Touch. Isn't it just an iPhone without the phone? But consumers began to focus on the iPod Touch as a gaming device, so Apple shifted their marketing tactic. Sales for the device started to soar. Now there are now over 21,000 different gaming applications for the iPhone and iPod Touch. And Apple hit the impressive milestone of two billion apps sold earlier this week.

The rise in popularity of low cost software has forced other gaming companies to compete on Apple's terms. Nintendo has just introduced an online digital store for its portable device, Nintendo DS. The store is very similar in concept to the iTunes app store. With this kind of momentum, it seems the other gaming companies will have to follow suit. It may no longer be a question of who has the best console, or the highest quality games, but rather who has the best portable games available at the most convenient price.

And in other news, Warner Bros Music has reached a new licensing agreement with YouTube after pulling their videos off the outlet nine months ago. Warner Bros Music pulled their audio content, after negotiations with the online site broke down over the distribution of revenue.

Both organizations need each other. Warners needs an outlet for their artists and YouTube needs professionally generated visuals. The new agreement, which will take place by the end of the year, allows Warner Bros Music to run ads against its own video content. Warners will get a majority of the ad revenue, and they'll also be able to advertise on any user-generated video of a Warner Music song. So, if you want to upload your own version of the Red Hot Chili Peppers, “Under the Bridge,” by the end of the year, you can.

When the sound does return, why not celebrate by watching and listening to something extraordinary. Here's my pick: Kid Koala is a needle-drop deejay. He literally drops a turntable needle down on vinyl to create a specific sound. His tour de force, in my opinion, is his version of Judy Garland's “Over the Rainbow”. It's masterful. When the music comes back on, check out this wonderful piece of artistry. You will find the link on my On the Beat website.

It would appear Warner Bros made the agreement just in time. According to comScore, the market research company, about 161 million unique US viewers watched a video online just in August. That's the largest number ever recorded. Users averaged 157 videos each! That's a lot of online television.

This is Celia Hirschman with On the Beat for KCRW.

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