Here’s a piece I posted at globetechnology.com about YouTube in the wake of the Google deal:
What was just a wild rumour on Friday, poo-poohed by many observers — including dot-com billionaire Mark Cuban — became reality on Monday, with Google’s $1.6-billion (U.S.) purchase of YouTube, the video-sharing phenomenon best known for clips of a fat guy doing the Numa Numa dance in front of his bedroom webcam, late-night confessionals from an actress known as “lonelygirl15” (recently hired as a spokesperson by the United Nations) and a lesson in what happens when Mentos meet Diet Coke.
So what happens now? The most obvious thing is that YouTube goes from being an underfunded (arguably), money-losing (allegedly) but wildly popular website — with over 100 million videos streamed every day — to a ridiculously deep-pocketed company that is now attached at the hip to the world’s most powerful online advertising vehicle. Is this the beginning of the new Internet video revolution, as Google CEO Eric Schmidt said on the conference call following the announcement? Or is this an eBay-Skype sort of deal, with a lot more heat than light?
Mark Cuban — who sold Broadcast.com to Yahoo for $5.7-billion in 1999 and later bought the Dallas Mavericks basketball team — remains convinced that Google is going to be in for a heap of copyright trouble from content owners whose material keeps showing up on YouTube. Others feel likewise, and they note that the Fox Network could make things very difficult for the new YouTube if it decides to remove every clip from every Fox show that makes its way onto the video-sharing site. Why would Fox do that? Because it is owned by News Corp., which likely wants to leverage its MySpace social network and become a prominent player in the video-streaming world.
There is also the argument that YouTube is no different than Napster was in the original dot-com boom days: broadly speaking, a content aggregator and distributor whose content consists primarily of copyright violations. Interestingly enough, however, several of the world’s largest record companies have already signed deals with YouTube — before the Google acquisition was announced — that would see music from Warner, BMG and Universal artists freely available on the site. Is that a sign that big media companies are willing to embrace the new world of online media?
NBC has taken a major step into that new frontier with the announcement of a separate division of the company — called National Broadband Broadcasting Co. or NBBC — devoted specifically to distributing the network’s content from TV shows and other features through online portals such as YouTube. Other networks have started streaming some of their shows online for free, supported by advertising. Although it’s a little early to say for sure, it’s possible that the TV networks and movie studios have learned something from the experience of the music industry.
Although Mr. Cuban hasn’t mentioned it so far, the combination of Google and YouTube removes one of the major complaints he previously had about the video-sharing site as a valid business — namely, the lack of enough financing to compete with any major broadcaster that wanted to create their own version of YouTube. With one fell swoop, Google has solved that problem, and created an online video giant that would theoretically be impervious to competition from just about anyone, including Microsoft (which recently launched its own version of YouTube called Soapbox).
One of the lingering issues Google has to confront now is what happens to YouTube if it can’t manage to convince the networks to let it use their material. Does it take it all down, or wait until it gets nasty letters from lawyers? And if it does the former, will YouTube lose some or all of its appeal? Would people rather watch “stolen” content like the Lazy Sunday video clip from Saturday Night Live (which was allegedly responsible for NBC’s Damascus-like conversion to the benefits of online media) or “user-generated content” like lonelygirl15 or the Mentos video?
The answer to that question depends largely on how YouTube’s discussions with Hollywood and New York go. If the “old” media giants know what’s good for them, they will take a hint from what happened to the music industry and listen closely when they take a meeting with that long-haired guy with the surfer dude name: YouTube CEO Chad Hurley. Not only is he now worth $250-million or so, but he just might hold their online future in his hands.