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Google buys YouTube. Why?

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Maybe I'm just too cynical, but now, after Google went from "Do no evil" to "Must accommodate the Communist Chinese government so we can make beaucoup bucks," I look at Google's snapping up of YouTube and see an acquisitive public corporation that is largely out to own things, a corporate model in the internet computing world that Microsoft has pioneered to such notorious repute.

"This is the next step in the evolution of the Internet," Google Chief Executive Officer Eric Schmidt said during a conference call Monday.

YouTube will continue to retain its brand, its new headquarters in San Bruno and all 67 employees, including co-founders Chad Hurley and Steve Chen. Meanwhile, Google will continue to run a less popular video service on its own site.

So the goal is really just to own YouTube.

YouTube has been a sensational success, proving that free social networking can work even with bandwidth-hungry video content. The online video revolution was not televised, but it didn't matter, it was videotaped -- or, rather, the revolution was videotape. YouTube has been the trailblazer. Google has been the also-ran, the giant who doesn't want to miss out on all the fun.

I'd like to think that Google's acquisition will mean that YouTube can be even better, but when it comes down to it, what this could mean -- and I'll certainly admit that this is by no means certain -- is fewer options for users, fewer decision-makers calling the shots, and a net loss for innovation and diversity online. We'll see. As Forrester Research's Charlene Li says in the AP wire story:

"It's going to be like, 'You can either fight us or you can make money with us.'"

In another interesting take, S. Garrett ponders Google's likely copyright headaches, and links to Mark Cuban, who says:

it will be interesting to see how Fox reacts to this deal Fox owns content. Neither google or YT does. Could Fox, the owner of Myspace put GooTube in a huge hole by being legally aggressive and going after every video of Stewy from Family Guy , American Idol, any of their TV shows ? The same with their movies. Beyond just Gootube, (and I mash them together with nothing but love :), Fox could make them look real bad by using supoaenas to go after individual Gootube users. Fox is also a stickler for DRM, they aint gonna like having their content floating DRM free around the net. Sure, myspace would have to clean up some of their own videos, but it would be a far easier chore than Gootube has. Now that would be a celebrity lawyer match worth watching.

Hmmm... David Smith on Preoccupations writes that Google is in the eye of the perfect storm over not just copyright but censorship, net neutrality and national security.

But forget what Li, Smith, Cuban, Garrett have to say on this. Forget what I have to say on this. And of course forget all the buzz you'll see on the old media television news channels.

More interesting will be what the YouTubers have to say about this themselves. After all, that's what YouTube proved, and why Google wants to own it.

Contributing Editor Laura Scott also blogs at rare pattern and pingVision.

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Laura Scott 5 pts

But consolidation does not happen without consequences. Of course, such a buyout is the goal of just about every VC-funded operation, since that's what the people calling the shots in most of these deals (i.e., the VC firms) are after in the first place.

But are Google's deep pockets really what YouTube needs? As I said, I don't know what YouTube's finances were like, though it's safe to say they didn't have a 10-figure balance sheet. But YouTube's very success is perhaps an indication that the 80-billion-pound gorilla is no longer the leader in new technologies, nor perhaps the best organization to ride herd on innovation. (Is Flickr better now that it is part of Yahoo? Aside from some minor widget changes, and Flickr's absorbtion into Yahoo's (non-)privacy policy, has much innovation happened there since the acquisition?)

Sure, people like to have gizmos, and so far don't seem to be all that concerned about all the privacy they give up to use them. But is that the golden path offered by this new economy emerging with its long tail, disruptive technologies and as-yet-undiscovered social desires?

Google has come a long way from knocking one out of the park with their search engine and roll-out strategy and do-no-evil practices. What tends to happen with disruptive technologies is that they either take over the paradigm, or they get absorbed and/or subsumed by the status quo. The transistor radio exploded onto the scene in 1965 because it connected with a social need, and a new market niche was born overnight. But how many things were just too disruptive? BitTorrent is in the target sights of the media conglomerates, for example, not just because of file sharing, though that's what they claim, but also (and perhaps mainly) because it challenges their established distribution marketplace. (BitTorrent can be used for legal, trackable distribution, but even that seems to be too disruptive for the comfort of old media.) But maybe that horse has already left the barn. How many others did not?

In other words, is this corporate mainstreaming of the more successful wild and diverse emerging phenomena of all kinds emerging from all the "nowheres" out there really what offers the most promise for the economic future of technology in general?

Everyone in the mainstream media likes to look at these M&A events purely from the Wall Street perspective. I'm just wondering about other perspectives.

Laura Scott
design ( http://www.pingv.com ), snap ( http://scatteredsunshine.com ), blog ( http://www.rarepattern.com ) ... admin ( http://www.blogher.com/website-feedback )

Lisa Stone 6 pts

Hi Laura,

I've been turning this Rubik's cube over and over and just can't follow you. If Google's acquisition helps YouTube survive by figuring out a business model that sustains an 80 server habit so many of us enjoy, is that not innovative? Especially since YouTube has helped splinter the hold that Fox, CNN and MSNBC have on newsbreaking video and created a much richer and more diverse opportunity for all of us to download video -- from anime to sports to bloopers to news?

Anything that sustains this service shows respect for the long tail, seems to me. Whether or not Google changes it for the better or worse remains to be seen -- here's hoping they don't.

I've been using Writely, Google spreadsheets and YouTube a lot lately, and my Gmail service gets better almost weekly -- I don't see anything there yet that indicates Wall Street calls more shots than user feedback. But is there something you think I'm missing? Or is it your opinion that acquiring tools rather than building them yourself is bad if you're a Google? Seems to me that if you're running Google, the ultimate in anti-hubris is admitting that a scrappy start-up (or not so scrappy and VC-funded start-up like YouTube) is doing it better than your thousands of Ph.Ds.

That said, I think Cuban is (a) a great wordsmith, if he invented the GooTube thingy, and (b) on to something. Copyright hell could be had. Then again, with marketing tools tanking left and right, seems to me that Fox gets more positive than negative out of YouTube, no matter who owns it.

-- Lisa Stone
BlogHer Co-founder ( http://www.blogher.com/member/lisa-stone )
Surfette ( http://surfette.typepad.com )

Laura Scott 5 pts

I just see a long-tail future, and these hit-driven consolidations move in the opposite direction.

Are you going to post a video opinion on YouTube?

Laura Scott
design ( http://www.pingv.com ), snap ( http://scatteredsunshine.com ), blog ( http://www.rarepattern.com ) ... admin ( http://www.blogher.com/website-feedback )

Laura Scott 5 pts

...but I doubt that they were living off of VC money as a top 50 site. But maybe I'm wrong.

I don't doubt that the deal was attractive for YouTube. Who could sneeze at $1.6 billion? My disappointment is more in the way Google is doing business now, not as an innovator but as an acquirer.

Of course, that was pretty much inevitable once they went public and Wall Street started calling the shots. I'm not surprised the hit-driven megacorporation investors are thrilled at this development, either. How ironic for a social and business phenomenon all about the long tail.

Laura Scott
design ( http://www.pingv.com ), snap ( http://scatteredsunshine.com ), blog ( http://www.rarepattern.com ) ... admin ( http://www.blogher.com/website-feedback )

Robyn Tippins 5 pts

I absolutely disagree. I can only see good in this. YouTube had only 30 mos worth of VC to feed their $1.5M per month bandwidth habit, and that was in March. Someone HAD to buy them. No one else will give them as much leeway as Google.

1. Google Spent YEARS Unprofitable
2. Some of the VC behind YouTube are Google peeps

Why buy it?
1. Passionate users
2. More adsense real estate
3. They now have 4 deals w/major labels (CBS,Warner Music, Sony BMG and Vivendi Music) that will answer the copyright issue.

I wrote a little article on this.
http://sleepyblogger.com/?p=381

YouTube is a passion of mine (youtube user: duzins)

( http://feeds.feedburner.com/sleepyblogger/Rjxs )