61. Everyone is focused on the moves that GOOG makes that seem to,
in a 2000 like bubble, chart the areas of internet growth failing to notice GOOG strength is predicated on their revenue/profit generation advertising models. Worst thing is that noone seems to notice the EROSION of the AdWords model they base on. The ads and the associated fraud and smaller and smaller efficiency are going to bite them big time.
I am only waiting for a better and more attractive advertising
solution to show up- probably equally simple, almost naive just like AdWords that will turn the tables on them. Sooner or later it will happen. Maybe it is going to be viral one...who knows...all I know the CTR for AdWords are becoming the biggest sag on advertisers coffers and those ads' efficiency the associated fraud seems to become more and more questionable. Once slows growth, no amount of additional traffic is going to help GOOG. It is all about
1. larger audience (what YouTube offers right now at the cost of copyright infirngments among other thigs)

AND

2. selling more and more accurate ads that will generate profits for advertisers and goog. I think AdWords models will face serious scrutiny very soon.

this is AND not OR. I think the next GOOG challanger will address 2 more than they will be able to address 1.

Posted at 8:53AM on Oct 10th 2006 by Peter

62. damn, you all are SO wordfull... where do you get such a big bunch of letters to throw them here?!

Posted at 9:09AM on Oct 10th 2006 by scweine

63. This deal essentially means Ebaum's World is worth a half billion. (shudder)

Posted at 9:28AM on Oct 10th 2006 by Dan

64. YouTube videos have something very important that mainstream media does not:

* Immediacy;
* Drama;
* Relevance to normal lives;
* Social commentary;
* Universality.

Is that worth $1.6 billion? No, because YouTube has no base of paying customers.

For all the hype of Web 2.0 and other nonsense, there is no better indicator of a bad business than an absence of paying customers.

As Peter Drucker wrote in 1973: "There is only one valid definition if business purpose: to create a customer."

YouTube has great potential, but it is only potential. The challenge ahead is for Google to convert a potentially disruptive form of media into a real business.

More thoughts on the challenges Google faces and the disruption of mainstream media:

http://www.ondisruption.com/my_weblog/media_meltdown/index.html

Posted at 9:33AM on Oct 10th 2006 by Michael Urlocker

65. Really tho, boring tech deals, whole other world out there, Industrial & Commercial Bank of China to IPO hook $22 billion, PNC grabs Mercantile for a cool $6 billion…Rusal, SUAL & Glencore three-way, GlaxoSmithKline grabs CNS…but no blogger ink yanked for that. Cross-eyed nose-level view techie thumb suckers…gawd. :)

Posted at 9:41AM on Oct 10th 2006 by Christopher Coulter

66. Just some observations:

If Napster and the iTunes music store can play short audio clips of songs that are for sale on their sites why couldn't GoogleTube exploit this to play short low-quality audio clips (as part of a video) on their site.

Furthermore, they could implement a way to offer viewers either a subscription music service to hear all audio in high quality or merely a link to their own music store to buy songs they hear.

Also, I merely own two small cafes and therefore, am no corporate law expert but it would seem logical to me that Google could set up a separate corporation/entity that would allow Google to control it but limit its liability in case of future copyright infringement suits.

Posted at 9:57AM on Oct 10th 2006 by zOOm

67. Google morons for buying Youtube? Erm, didn't anybody read about the new iTV media streaming device being mooted by Steve Jobs at a recent Apple launch, added to the fact Google have been in talks with Apple (http://www.appleinsider.com/article.php?id=2055) I think Google are trying to seize a share of the market should iTV take off in the same way the iPod did. If so Google are being very wise indeed. Look back pre-ipod launch, if you had the chance to buy up a music sharing site before the ipod was launched, and then also get an agreement to share the ability to get music onto iPods would you, with the benefit of current knowledge, not jump at the chance? It may be risking the wrath of copyright lawyers, but my word if it takes off Google have just got a Golden Ticket.

Posted at 10:01AM on Oct 10th 2006 by Paul Aberson

68. Right on the money, Mark. Amazing, the DMCA has been whored out well beyond its original purpose, and is now the basis for a company to create a content-sharing business with absolutely none of the real costs of a brick and mortar company.

Review content for rights issues? Not my problem. Obtain content from the real rights holders? Not my problem. Search my site for infringing content? Not my problem. Broadcast and brick and mortar competitors can't compete with my business model, which fails to account for costs of clearing and using other people's content? Not my problem.

The problem is clearly with the DMCA. It has served its purpose to promote the rapid developement of the Internet. Now it needs to be changed, so that the online world bears the true costs of doing business, just like the offline world.

Or we could just abandon rights altogether and feast on rights rich content like hyenas until all the really good stuff is extinct.

Posted at 10:35AM on Oct 10th 2006 by Dave

69. What if... Google treats uploaded content like open TV? They could close an 'umbrella' deal with Fox and let Fox shows be uploaded without problems. The fact that a Fox show is uploaded by 10 million users doesn't mean that it will be seen by more or less people than if it were made available by a direct contract between Fox and Google as a "tv network". The source of content doesn't change the payment target. And it would be great to have the audience picking (uploading) their favorite shows.
The real challenge is to categorize and identify the market share for each show, so revenue can be distributed accordingly (internally at Fox). And of course there will be companies that will not board the 'umbrella' contract option. But business-wise, why not close this deal?
The real danger for Google lies exactly on non-copyrighted content. If my son bullies a guy in school and uploads a tape, I can see big trouble for Google.

Posted at 10:47AM on Oct 10th 2006 by What about TV?

70. Mark:
This is shocking as heck to me that napster can get nailed the way they do, but people love youtube. 1.6 billion is insane money. Imagine all of the money they will have to pour in to it from these upcoming lawsuits.. and turn it to profitability!

Posted at 10:49AM on Oct 10th 2006 by Miguel

71. You can see the video of YouTube founders Chad and Steve Here:
http://digg.com/business_finance/Analysis_of_the_YouTube_Acquisition_by_Google
at the end of the article.

Got a nice in depth review of the takeover too...

Posted at 10:54AM on Oct 10th 2006 by Chris Tew

72. Mark you didn't see the deal YouTube struck on copyrights, content management and advertisement with CBS, Sony and Universal. They might be more to come. They obviously have already thought about and making moves against what you are worried about. I think you didn't imagine they would be able to pull it off.

http://biz.yahoo.com/ap/061009/youtube_cbs_universal_deals.html?.v=1

Posted at 11:00AM on Oct 10th 2006 by Vaughn

73. Curious as to why you think having an ascap/bmi license "so the people that have to fight the hardest to get paid, actually do!" will mean they actually will?

Posted at 11:01AM on Oct 10th 2006 by Chip

74. It is not that hard to understand why Google wants YouTube. If they will earn bucks out of it. Thats another question which is today impossible to answer.

"Create a web site or service that attracts a lot of Web surfers and makes them view many pages per visit. If your web site becomes super popular Google, Yahoo, or MSN would be interested in either acquiring you or striking an exclusive advertising deal worth millions. And since creation of such mega successful web sites is unpredictable process anybody can do it with enough effort, patience and creativity."

David Hornik, at http://www.ventureblog.com, spoke about that last October about the tendency to build companies and plan to get aquired.

The more details about the deal that are revealed it definitely is a power move by Google to strengthen its position on the market.

Posted at 11:32AM on Oct 10th 2006 by Erik Sundelof

75. from http://discussions.abalone.ca/showthread.php?t=84

"what cuban fails to remember is that his are the same cries that were heard when people started sharing mp3s - a trend that led to the success of iTunes, the iPod and a million musicians around the world who would have otherwise gone unnoticed. sharing videos, sharing music. it's really not much different. and as iTunes has already shown it recognizes this inevitable change in how we view video copyright laws by recently starting to sell movies alongside mp3s in it's music store, so will all the other smart companies out there. and chances are, youtube is one of these smart companies, considering they have already signed a deal with warner to distribute music videos."

Posted at 11:33AM on Oct 10th 2006 by Courtney

76. Mark, I understand where you are coming from and
agree but I think that your business experience
is actually hurting you in evaluating some things.

I have found that it is much harder to start
a 2nd business after being somewhat succesfull initially, simply
because you tend to end up knowing to much. That may seem
to not make sense. How can you know to much?

It can hurt, because you won't take chances that a younger
less experience person will take. Because they don't know all the
things that can go wrong so they actually try and sometimes succeed.

The novice thinks they can solve all the problems in weeks. The seasoned person is discouraged, thinking they might not even be able to solve all the problems.

You probably have already said this, but my guess is that if someone floated the youtube idea to you you would have never
invested in it because all you would have thought about
with your knowledge is the legal ramifications among other things.

And you would have been right of course! And I would have done
exactly the same, I would have thought of multiple
reasons why it would never work.



http://www.videoproduction.com

Posted at 12:36PM on Oct 10th 2006 by L Erlich

77. Quick few things (my apologies if some already beat me too it, didn't have time to read whole thread yet):

1) While reading this years Forbes 400 issue, I found it rather interesting that Mr. Cuban's net worth is greater than one of the Yahoo founders and just below that of the other founder. While this isn't that interesting on its own merits, it is very telling about who got the better end of that deal. (And what each has done with their money since)...My obvious point is that the YT founders are getting the far better end of this deal. And on that note, who wants to wager with me that in 5 years Sergey Brin and Larry page aren't worth half of what they are today? (15 billion or so as I write this) -- And yes, I am short GOOG as of today so I'm already making that wager (from 433)

2) Why couldn't Google put, say, $1 billion into marketing their own YT?

3) Somebody is working on a better mousetrap than Google has now...I will be shocked if Google still dominates search in a few years, let alone dominates Microsoft and all the other nonsense they are branching into these days..Google's search is very poor at best. Sure, it beats the comp, but it leaves a lot to be desired and somebody will fill that void.

Posted at 12:52PM on Oct 10th 2006 by David

78.
In a way broadcast tv already functions a bit like youtube
in terms of licensing. A large amount of content created for say VH1 is made by smaller video production houses with a contract with Viacom that places responsibility for clearing music/video/pics, etc. on them. there are continual lawsuits against viacom (and i'm guessing others) for airing non-licensed music,photos, etc. these probably move very slowly and may fall back on the content "creator" (ie. uploader). "hey, we just broadcast the stuff - THEY made it"!!!

Why does Viacom not care? It's a ton of work and money to
do these contracts properly , i think it's actually easier to let it slip (or pretend to not know about it) and worry about it later. the money saved + advertising is enough to offset the lawyers working it out later. (ie. the person who sits around and does it properly is spending too much money upfront and wasting wayyyy too much precious time).

the last viacom show i worked on there was music from labels you couldn't touch because of excessive lawsuits... I mean they are so pissed you can't even pay them to use it! (ie. steal some but not too much!)

Youtube will get sued alright, but when they work it
out with the content people there will be more pros than cons and at this point the content owner will be interested in playing nicely and will probably already be getting paid for newer content they provide (or provided by user) that is properly indexed / noted / accounted for and compensated for in some way (per views, whatever). If not, well, then just pay them off!

Figuring out an interface with the user (drones) will be challenging, but i have a feeling they will all be laughing to the bank as "everyone uploads everything." Google will figure out a way to figure out what exactly you are uploading and where a slice of the money (if any) should go.

after all, the content creators should be so lucky that people actully want to re-transmit the sh*t they make - they may finally realize this, as music companies should.

what this means is that the damage may be done already and there is nowhere else to go but UP for everybody involved... working it out with all litigation no one will win and will drain all those involved while others steal the spotlight.

in a way this could be the sign that big media finally realize they can't control their content 100% and with p2p,
torrent, etc. the best thing to do is work with the people who are responsible in distributing it in ways they cannot (that's you at home!! with tv out into PC and internet connection). controlled anarchy. and suing everybody in sight is not a solution! remember this is digital media and by nature can copy to infinity, you can't fight that! not even with some crap DRM.
do or die, figure out a way to make some extra money back or go away and cry to your lawyer that the sh*t is all over the intramanet.

just a ramble though-
and at the end of the day i think 98% of the stuff on Gootube will be artifacted/pixelated boredome. the novelty may wear off. then people will ask: show me something that looks good and has production value and is more engaging than some 10 min. lameness.
maybe, maybe not?

I'll just re-watch my Cassavetes movies instead!

Posted at 12:52PM on Oct 10th 2006 by submanac

79. It's hilariously naive: everyone seems to think that you just stick advertising on youtube videos and -- presto! -- money!

Allow me a South Park reference.
STEP 1: add advertising to youtube
STEP 2: ??
STEP 3: Profit!

Yeah, YouTube is very, very popular. No advertising.

Remember email before spam? Remember movie theaters before 15-minute pre-roll advertising blocks? Remember TV networks when they were maxing out 10% of ad content per hour in 1982, as opposed to the 22+% average today?

You simply cannot draw trends based on current YouTube traffic, then add advertising to the mix, and expect the trends to continue.

OK, let's say we pay content creators a share of the advertisinig their videos bring in. (by the way, how's revver doign?) What's their reaction? Do whatever the hell it takes to get their video watched. How fun will YouTube's unpredictability and spontaneity be when we have 13-year-olds creating video spam to pad their view counts?

You sound like an expert on copyright. I don't know about all that but your arguments sound pretty smart. What i do know is that people don't like advertising as much as they like content. I would rather watch a viral video than an ad that is shoved down my throat. And how much does it suck to watch an ad a second or a third time. As long as Veoh, Metacritic, Youtube2, etc are ad-free, the vitality of Youtube's user community will inversely related to the advertising revenues Google earns off of it. I vote: Bad move.

Posted at 2:04PM on Oct 10th 2006 by Ken Wilbur

80. Courtney, you can't compare iTunes to this situation. iTunes is a closed system that is successful because it is well-designed and has a viable pricing scheme. It has a business model that works for users, content makers, and Apple.

Napster and other peer to peer systems died/are dying because they give the candy shop away for free and the courts won't let them do that. And I'm inclined to think that judges aren't going to prefer the "not my problem" approach once a content holder (probably a rival) puts their feet to the fire.

Posted at 2:12PM on Oct 10th 2006 by Sharr