Kudos to Youtube for getting them to say yes. My advice to you is to always protect your downside. Ignore all the scammers who want your money, and dont listen to all the tax scammers who want to save you money on taxes. Writing that check is painful, but its the right thing to do. That aside..
It will be interesting to see what happens next and what happens in the copyright world. I still think Google Lawyers will be a busy, busy bunch. I dont think you can sue Google into oblivion, but as others have mentioned, if Google gets nailed one single time for copyright violation, there are going to be more shareholder lawsuits than doans has pills to go with the pile on copyright suits that follow. Think maybe how Google discloses what they perceive the copyright risk to be in the SEC filings might be an interesting read ?
I think there will be supoenas to get the names of Youtube and Google Video users. Lots of them as those copyright owners not part of the gravy train go after both Google and their users for infringement.
It will be interesting to see how this impacts DRM. As it stands now, there is no DRM on all that video being offered from Google or YouTube. Millions of copyrighted videos that their owners spent a boatload to copyprotect that is available to everyone and everyone without it. (Personally i think DRM is a waste of money, but will all those labels and content providers ?)
I think it was interesting how Google and YT both rushed to get deals done with the music labels. That tells me that they arent comfortable hiding behind the safe harbor laws. If they were, they would just be telling people to send take down notices rather than doing deals that require software to detect copyrights.
It will be interesting to see if Youtube moves their videos over to Googles Data Centers. Google is a centralized datacenter with peering from what I can tell. COmpletely different than what the CDN networks do. Will that set a new trend ? It makes bandwidth much cheaper as others have pointed out.
It will be interesting to see just how google reconciles selling videos like Crazy in Love from Sony, when the same video is available as a user upload for free from youtube.
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.
Which in turns means that the Copyright Detection Systems in place by Google better be a whole lot better than they are right now. They are going to have to detect music, TV Network Bugs, all kinds of protected materials. Right now they are doing nothing. Which leads to movies, like ours
We sent our Take down notice today by fax. But should I supoaena the name of the person who uploaded it ? I wont. Someone else will for their content.
And what if Im completely, absolutely wrong and no one sues anyone ? That everyone just loves the fact that their content is available to tens of millions of viewers and advertisers and Youtube and Google definitely qualify to be protected behind the Safe Harbors of the DMCA ?
That Im an idiot and it really is different this time, and the content companies have all recognized that ?
Well, I’m ready for that too. I went ahead and registered http://www.effingreat.com because thats how much fun its going to be using Filesanywhere.com features to support a “load everything you own and share it with world” website.
I will host in the same way as Youtube and Google. Upload in the same, dont ask, dont tell approach. I will sell ads however they do. Preroll, or adsense or whatever.
Only i will expand the storage beyond 100mbs and will open it up to books, term papers, pictures, movies, music, articles, anything and everything that can be digitized. I will add the appropriate disclaimers and provide a cool social networking interface. Maybe something like Goowy.Com or maybe something like Flixster.com. I mean, why not ? What could be cooler User Generated Content than the termpaper you wrote on Daniel Boone ? Or what could be more interesting than scanning in a book you wanted to give to someone and just posting it ? And dang, just wholesale upload all of your MP3s.
And best of all, I would get a license for public performance from ASCAP/BMI so the people that have to fight the hardest to get paid, actually do !
And of course I would have some other tricks up my sleeve. Maybe pull a page from the old shareware days. Add a paypal link to every content page and let people get paid for their original content. If no one is going to sue anyone for copyright infringement anymore, maybe you could upload stuff you dont have the rights to and get paid by generous people who want to transfer some dollars via PayPal to you.
Am I suprised, by the Google YT deal. Yes. Does it open up a whole new world if they go liability free ?
You have no idea.
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I will host in the same way as Youtube and Google. Upload in the same, dont ask, dont tell approach. I will sell ads however they do. Preroll, or adsense or whatever.
Comment by darren -
Have you ever thought about producing a movie?
Also was wondering how you got started when you were younger?
Also I am a Sixers season ticket holder was wondering what you think about what the Sixers got back in the deal for Iverson I think our gm sucks, and should be fired here in Philly. haha
Anyway it be cool to maybe meet you when Dallas comes down to play Philly here Sunday February 11.
Comment by Sergey -
http://www.alleurohotels.com
hotel reservation, cheap hotels, discount hotels, cheap accommodation,discount hotel rooms,istanbul hotels
Comment by hasan -
Hi Mark,
You’re definitely right about the possible litigations from Google’s acquisition. I guess that’s a hurdle that they probably have thought about already and have made contingency plans for.
Given that, I think it is a great move in terms of advertising revenue. If you look at the CNet videos you will notice that they normally put in some sort of ad before you actually get to watch their videos. The same goes for Yahoo!music. Because of youtube’s popularity and usage, we’re talking about millions of ads being run per day. Now, that’s not the only thing Google gets.
Google now has access to millions of users’ habits and personal data. You have a tracker attached to this blog of yours. Imagine creating relationships with the data that your tracker gathers and cross-reference it with other data that you have on them. An example of this would be our political parties. They cross-reference your voting record with your spending habits and more. From this information, they have a good understanding of what a possible wavering voter is, or that Volvo owners tend to vote democrat. Google’s acquisition of youtube gives Google a very powerful tool to create a statistical study of their users. This in turn creates a very powerful tool to figure out the specifics of what each IP owners like and not like.They can eventually cater their ads to specific IP adresses. Now, that is power, being able to specifically target your ads to IP adresses.
I know it sounds far fetched but it really is simple if you have the proper algorithms and proper statisticians in place. The only problem Google has would be the possible lawsuits that will come from the Youtube acquisition.
Comment by Francis -
Considering Google’s insane P/E, I’d say that paying in highly overvalued stock for a hype video service is a good deal.
Comment by Vidizer -
If they commercialize the true user-based content of youtube, then that means that the content providers should all get compensation based on views. That means the numa numa guy will beat out WB shows, and cute sleeping kittens will make some person with a digital camera richer than a sitcom producer. Will it ever come to that?
Comment by Gavin -
Mark, good stuff here. Eventually, labels, bands etc. will not be able to ignore the power of the internet (Myspace, Youtube). Bands don’t sell a million records anymore. They make their money on touring and merchandise, and even then after it’s split up there’s not much left. Monetizing video and other exclusive content will revolutionize the way bands make money. It’s inevitable.
Comment by Doug -
Mark,
Buy the Cubs Dude! I was raised around the city of Chicago and we are starving for good ownership!
On another note, I’m a United States Marine and just moved to Paris, Texas. My girlfriend is coming out next weekend. Do you have any suggestions on where to hang out in Dallas?
Jim
Comment by James MacLean -
This is THE bargain i believe.
I don’t consider Google to be a bunch of college guys not knowing what to do with their money. I am pretty confident that they have covered every copyright aspect before they proceed with the deal.
They will make another fortune with this deal, i tell u.
Comment by jKwon -
Any video on YouTube is getting awesome exposure.
Even allegedly copyrighted material (from TV feeds or otherwise) is benefiting from 100% free publicity.
Suing YouTube (or Google) for copyright infringement is backwards thinking on steroids.
This world needs less “copyrights” and more “truly unique value”, in my humble opinion.
Comment by Claude Gelinas -
u think google is crazy ? u should put adsense ads on your blog & then see who is crazy ??
Comment by Nokia -
This could end up a very good merger …
I know you did better off broadcast.com then the people purchasing it.
YouTube is much more likely to keep its lead in the video market with Google behind it …
It will be interesting to see how this progresses.
Comment by Edmund -
Mark,
I think you are wrong about this one. I think you have to give Google some credit here and think about the idea that they did not make a $1.6B purchase without thinking the copyright and DRM issue through.
Remember the record industry was going after Napster to immediately stop (like yesterday) them from file sharing as well as damages (not so immediate). Video is very different from audio and if the big studios with the best content have not tried to go after YouTube yet for violations or DRM concerns, then you have to ask yourself is it as big of an issue as some are making out to be.
I see YouTube as more of away to promote content and offer the single individual their 15 minutes of fame. If YouTube was not offering the full-feature length movie (2 hours) let’s say from Disney or one of the other major content media giants, its short format content that they offered, then it’s just a video clip or movie-trailer, right.
And if you are individual and you have dreams of going after Google then I say good luck!
Comment by Keith -
The bigger the risk the better the payout if it is successful. If it fails them, free publicity, if it’s successful free publicity. Companies like google are not likely to just fold over and die under attack. They are more likely to be creative and conquer. Kind of like you Mr. Cuban. Not every decision a business of statue makes is successful, but every decision is within their means of controling consequence.
Comment by Bernice -
Mark – You’re likely correct. While an ISP should not be responsible for a domain owner’s postings, the domain owner should be responsible for everything on his/her/their site. – Steve
Comment by Steve Jaeckle -
Google just expands its Adsense program to the videos. Affiliates have to abide by some basic content rules and that is how Google keeps it safe for advertisers. YouTube already has something like this in place with its Directors system.
Encourage people to make shows, blogs. Google should make available a quantity of royalty-free music and stock material that people can use in their videos. 250 different pieces of music covering all kinds of themes would go a long way.
Comment by Bittorrent -
Like your self I don’t think the video sharing market is mature enough to have one company acquire another.
I am still waiting for a press release by google telling us is an Aprils fools gag. But, I just checked my calendar and todays not April 1st.
If YT did make their money is time that the take that money pay their taxes and bring out the next generation of social networking sites.
Only time will tell I guess. But, I did enjoy your post.
Comment by Christian Ter -
Insightful thoughts. If you would like to partake in a poll that lets you predict the outcome and vote at the same time on whether it was a good idea for Google… then please visit this link: http://www.tapoll.com/poll/id/594706440 Thanks!
Comment by Dan Zen -
Christopher, I never said the uploader *didn’t* contribute value. In fact, quite the opposite. I’m only saying that they’re not compensated.
Comment by csven -
“It will be interesting to see just how google reconciles selling videos…when the same video is available as a user upload for free from youtube.”
a) have you actually seen a video on youtube? the quality is crap, and the picture often loses sync with the sound.
b) relatively few people know how to actually save a video from youtube to a hard drive or dvd.
c) because of: a), most people can’t be bothered to do: b).
sony will still sell “crazy in love” (whoever that is) to fans because they want to own it, and watch it on a screen bigger than a credit card.
most copyright owners realize that yt videos amount to nothing more than a preview copy.
http://dvtv.blogspot.com/
Comment by dvtv rich -
Google takes the ‘you’ out of YouTUBE.
Mark..keep it up…Web 2.0 is real but this damn hype is choking it. We all started with the SNL video Lazy “effin” Sunday
Simple facts…people go to YouTube for the content, same for products, they go to ebay. Get rid of that, either by raising fees (ebay) or copyright violation (which it is) and the content/products go away. Where’s the business model? advertising? premium accounts?..yuck..Web 1.0..haha…without good content on YouTube, you get a glorfied America’s Funniest Videos montage…without the Bob Saget voiceover…he likes to get paid too.
Comment by David Armstrong -
I would hope G has plans on paying the people who created the content.
Even with automation this could be an accounting nightmare, if G was to buy another payment processor perhaps they could even monitize the content and get a backend processor fee. Not sure if it would be considered doubledipping or not.
Overall the concept of video is great, The question is how do you justly pay the creator of the video content? Many people and companies love the free exposure and expect nothing in return other then hopefully some traffic.
The fly in the jelly is when people start to bring it to court?
Some people dig the free exposure of thier video content some people make a living from it.
Sam
Comment by sam -
Mark,
What is the difference between this and broadcast.com? It seems that both businesses (for the time period of the acquisition) are fairly similar.
Comment by OneEye -
You mentioned it, but apparently did not absorb what you wrote.
They are protected by the DMCA as a service provider. Period. The DMCA gives them legal standing to defend anything that comes at them. The difference between your plan and theirs is they do not upload the material themselves: people using the service do. Google is as much liable for YouTube content as the state highway system is for traffic fatalities. Yes, it is that simple. It may even be argued in court, but Google has the resources to set presedent.
You do come off like a crybaby about this whole thing. I will give you props for sticking with your original argument though. Additionally, your arguments would be more effective if you approached this with more critical thinking.
Go Pistons.
Regards,
Comment by karl m -
Hey Fast Eddie, why does Google need to spend $1.65 BILLION to do any of that? Youtube does not even have the capabilities of doing that now.
Hey Fast Eddie, you’re an idiot.
Comment by JR the GooB -
Mark- we need you in Chi-town. Its time for a Cuban take over of the cubs organization! Save us!
Comment by Mike -
>FOREVER AND ALWAYS FREE! hosting bandwidth costs covered by ad >sales.
This model gets boring and the amount of clutter it introduces and space theft that is conducive to distractive mess will have to make it go one day to be replaced by something really better…mark my words. UTub with ads in clips would be a really total disaster. And the goooodwords ads all over pages…this really sucks…I, for one, am tired of this and the sponsors may look for something better and even more accurate…all we need is a better advertising invention better than the overture patent that AdWords is all about and GOOG will be scrambling for
ground.
Comment by Peter -
I think it’s hell a cool google bought out youtube.com, they should have taken the cash but I’m sure google stock is a viable investment… Google is pretty much the future father of IT startups and if they don’t own it they soon will. My site trafficspiderweb.com, TSW, TSWeb 2.0, a few different variations, is soon to be a blogger, myspace, online dating, and image hosting site FOREVER AND ALWAYS FREE! hosting bandwidth costs covered by ad sales… wish me luck! Mark… if you like the name, trafficspiderweb.com or have any new ideas i can incorporate into my site please contact me webmaster@trafficspiderweb.com… don’t mind the blog links… just a cover for now… i am designing and programming the site on a local server at home… almost finished but needs alot of fine tuning! Peace out!
Comment by Brandon -
The solution to DRM is incredibly simple (and way to complex to impliment shortly.)
All that needs to be in place is a law making DRM and video/audio metadata be the domain of national standards authority. Then mandate that all digital content should contain a carrier track embedded in the code (encrypted) that is linked to a database at the copywrite office. Make it law that any tool that is used to edit or play back material will have to retain the embedded code at least (among other DRM functions) and report to the copywrite office if copies are made (to check the legality against a database of approved users with credits for copies)
Then any website that deals in free media distrabution be required to scan each file as it’s uploaded. Should any be flagged, the penalty for the company allowing the file to be shared will cost a set fine. It would be easily enforced. Music, Movies (esp pre-screaners), and DVDs could be protected that way.
But not really. The problem is with legacy hardware. TV contains no real way to prevent recording by an outside source. VCRs, Capture cards, Firewire (with adaptor) all can capture TV and most DVDs if played over analog cables. Any copy-protection placed on the video image could easily be masked out (or changed when recompressing). Worse still, privacy concerns would bog down legislation, making it more difficult to achieve. Privacy could be assured with the proper seperation of powers, but I doubt legislatures would vote for the most privacy-concious legislation. Not with Ted ‘The internets a bunch of tubes!’ Stevens in office.
We will get something like that eventually. After all, there would be lots of money in managing an operation like that. Imagine a company whose sole job is managing digital content creators digital licensing. Or a law firm boutique set up to manage claims against copywrite violators. Or a million other spin off corp. that cater to digital content management (under a near fail safe management system, a distrobution model with checks in place, that can flag violations automatically. This would open the door to effective internet distrobution of short and longform indie films to the masses.
Anyway, just an idea. You either have to have business unite to create a standard system that provides feedback to prevent pirating, or you have to get the government to reorganize the copyright law system to standardize. It really doesn’t matter what the actual system is, regardless of technical workflows, one of these two groups has to step it up and figure it out.
Comment by Mike C. -
Where can a person make money on this deal? goog is obviously not worth putting money into ($500 sounds great to some people but what is that 15%) – youtube isnt traded and neither are the dallas mavericks. But, considering that youtube inked a deal with lvlt for hosting and datacenter services (http://news.moneycentral.msn.com/ticker/article.asp?Feed=ACBJ&Date=20060912&ID=6014855&Symbol=US:LVLT) and goog will more than likely be hosting this in some form or another – where might an idiot find a way to make money off of this and not worry about being right or wrong about predicting the future of goog. Dunno about you guys and gals, but lvlt puts are starting to look really good to me – about 6 months out.
Comment by ytithorcle -
Interesting points. I, too, was shocked at how much google was willing to pay for youtube….at least, they paid with stocks not cash:) Advice to Chad and Steve, collar your google shares.
I think Google is suffering from the classic buying-growth-at-any-price illness. Google got on the wall street growth bandwagon and it can’t get off. Great growth ideas/businesses are hard to find, but google has so much money that i guess it will just throw money against the wall and see which one sticks.
how about that new youtube CFO who quited yahoo to join youtube not long ago? What I would like to know is if he was hired to light a little fire under google? in any case, I am sure he got a nice stock options package.
sigh, the madness of crowds….
Comment by Ben -
Blog Maverick is turning into a good place to go for better analysis than what’s available elsewhere. I don’t think Fox will put a turd in the Google/YT pool because collaboration is what the internet is all about. I’m not bullish on the future of Google or You Tube. Or Microsoft for that matter. I keep a list of everything that’s wrong with the internet. Some things are really simple and I wait for big companies to ‘steal’ my ideas. Ha! That won’t happen. Forget about filesharing. I’ve got better ideas. From one mark to the other, we should talk. Ok, I’ll keep dreaming. I’m but a lowly software tester…I’ve only been testing websites for 10 years, so I might know a thing or two about the communion of users and technology…or I might be an idiot. If we do talk, I have a screenplay. It’s an awesome story about the affect the internet has on the world’s oldest profession. It’s called “Girlfriend Experience” Alright…I’m done promoting myself. Email me. Thanks!
Comment by Mark -
I think this is the first known case of Google jumping on something as a result of them making a bad decision. Remember that they were offered MySpace a few months before Rupert Murdoch at about a third of the price that Murdoch wound up buying it. Now how much is MySpace worth? I think they didn’t want to look like chumps once again. Will the value of YT appreciate at the rate that MySpace has? I get the felling that it won’t.
Comment by Andres -
“Shares of Google gained $8.50 on news of the deal today, driving the company’s market capitalization up by more than $2 billion. So at least for the day, Google made more than $400 million on this deal.”
YouTube 2.0 – Forbes.com
Comment by Antonio Howell -
The real question in my mind is whether or not content owners will be able to profit from GooTube’s distribution capabilities more than they will lose. The biggest content owners in the world broadcast material over DRM-free radio waves. Being DRM free is not a deal breaker.
The age of Napster has come and gone. Content owners have a much better understanding of how to make money on the Internet and the risks involved.
Google has made a big bet in Internet video advertising. Clearly, given the risks involved they see a massive upside. I am inclined to believe that they are on to something.
Comment by Joe Kim -
Nice to see my analysis appear as a headline:
YouTube users could be paid for their video clips after the popular website was bought by Google for around $1.6bn (900m). Those who upload clips will get a slice of advertising revenue on the pages containing their videos.
http://www.dailymail.co.uk/pages/live/articles/news/news.html?in_article_id=409544&in_page_id=1770
Comment by Christopher Peterson -
Or maybe, just maybe, Google doesn’t let lawyers run the company.
Comment by Pointed Cap -
Mark, recent history suggests your feelings are not unfounded, but I suspect Google has bigger plans than maintaining the status quo for YouTube.
YouTube holds a solid plurality of the video sharing market (which if added to Google Video, makes up the majority) and was in the process of making content and advertising arrangements with several major networks before this deal was even announced. We can guess they have a plan to deal with the copyright issue that they deem to be acceptable based on the deals YouTube and Google have already brokered with networks and studios.
However Google is going to leverage the massive amounts of traffic it gets independently or with YouTube is unclear, but what is clear is that, if Google has built nothing else for itself, it has built a great digital distribution hub that, when juxtaposed with its soon-to-be growing share of annual movie sales or online video advertising revenue, it will be a mammoth very difficult to overcome.
We’ll find out soon enough if it’s a good idea. What I think could work doesn’t necessarily agree with what Google has in mind. Then again, what they have in mind could be much better than I thought possible.
Comment by Cam Beck -
I’m sure google will incorporate their adsense/adwords program into youtube.
The real issue here is not copyright, that bridge can be crossed when they get there. The real question is how long people will stay interested in “viral” videos.
I can already see the future – an episode of VH1’s I Love The ’06 where a no-name comedian tries to be funny as he talks about how ridiculous the fad of viral videos was.
Comment by Jim -
YouTube was built for sale from the begining. Like all biz video site on Earth. If you don’t sell the access, chances are you are looking for advertising. And to get the advertisers, you need a truck load of money first AND the right networking. As big as it seems, it all boils down to a club, that’s the fact.
YouTube had it all: money AND… an investor that had a seat at Google’s office. It’s all very well financially-engineered from the start. After all, come on, YouTube provided NO innovation for webcasting. How many video hosting sites we have seen since the first days of broadband Internet?
Now, is it a good business for Google? I’d ask: Is the whole Google a good business? I think it is very odd that they make money by dealing with other people’s content. Take Google News: just organize other people’s content and cash in. Now look what Belgium did about it.
Steve Balmer called Google’s business model a ‘house of cards’. You may hate MS, but they are building products. So far, I’ve seen much vaporware from Google. “Oh, they have an online spreadsheet”. Fine. Now do what Excel does. Maybe in the future, but so far they are on the business of buzz. If it takes too long for Google to come to the market with real products and services, attention will drop, and ad revenue as well.
Google’s history and Google’s moves are their main product. They’ve spent 1.6 billion on YouTube? What does it mean on press coverage and the irresistible desire of advertisers to board the Google wagon first? (OK, no marketing campaign costs 1.6 bi, but market cap increased 4 bi after news!)
I don’t want to see a Google-centric Web. Or any-centric Web.
Comment by What about TV? -
God, Mr Cuban, what about learning to write “subpoena” and to use apostrophes before thinking about blogging?…
Comment by Riccardo -
all very fine the YouTube thing. I say, Google was better of by looking what really is happening in the blogosphere area. Look for example at http://www.xolo.tv These guys make all things possible and not for the price of 1.65B
Comment by johan -
Mark,
Do you think that the reaction that Metallica got when they went after napster, may be blunting people from going after you tube? Just a thought.
Comment by Sean Fleming -
My question is this; the legal not withstanding, do the billions of clicks from YouTube increase the ad revenue potential of Google? Does spending a billion or so increase their value just by saying they have expotontially added that many eyeballs? My guess is that they believe it does. No different then selling ad time at the super bowl from my view. As Eric noted, Sergey wants to focus on “what brung them”.
Comment by phil -
lol
you said “only an idiot would buy youtube” before.
now it has changed to “crazy” from “idiot”.
seems like you don’t have the guts to say “google is idiot”
Comment by Zedzero -
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.
Comment by Sharr -
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.
Comment by Ken Wilbur -
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!
Comment by submanac -
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.
Comment by David -
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
Comment by L Erlich -
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.”
Comment by Courtney -
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.
Comment by Erik Sundelof -
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?
Comment by Chip -
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
Comment by Vaughn -
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…
Comment by Chris Tew -
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!
Comment by Miguel -
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.
Comment by What about TV? -
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.
Comment by Dave -
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.
Comment by Paul Aberson -
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.
Comment by zOOm -
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 billionRusal, SUAL & Glencore three-way, GlaxoSmithKline grabs CNSbut no blogger ink yanked for that. Cross-eyed nose-level view techie thumb suckersgawd. 🙂
Comment by Christopher Coulter -
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
Comment by Michael Urlocker -
This deal essentially means Ebaum’s World is worth a half billion. (shudder)
Comment by Dan -
damn, you all are SO wordfull… where do you get such a big bunch of letters to throw them here?!
Comment by scweine -
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.
Comment by Peter -
GOOG “database of intentions” hm…I beg to differ. all their moves are self serving drives to get as much ad revenue as possible. I beg to differ if this is in the interest of an “objective database of industrial” intentions that would be most conducive to creating a better world. There is a lot more to technology than services that are ad sponsored. I think GOOG imitates better and improves on things way better than others. Show me one serious thing GOOG INVENTED! The AdWords patent was Overture’s…come on…where’s the innovation…I mostly see cyclical improvements of things others devised…come to my mind their $30mil offer for freindster, orkut, now they got YouTube…with the loads of PhDs they are not that great at inventing as it seems they should be. They arther act like a big company running around making acquisitions…just like BEA CSCO
Because hiring PhDs only is not all what it takes to be the best. It has been like this from the days of Edison. There is always a chance to beat them. No advantage is forever.
Comment by Peter -
Mark,
I’ve got to believe that it might be in Google’s best interests to TRY and push the Copyright envelope. Don’t hide behind the DMCA… What if… they DO get to court and they get copyright laws not essentially overturned but significantly altered in their favor? Google, as John Batelle called them… is fast becoming the “database of intentions” for the industrialized world. To be able to house all of the content that has been generated… would be a culture-changing step for them… and put them in the driver’s seat for MANY years to come. So why not buy YouTube… give it a shot… see if you can give up 1.6 billion to find out where your future as the digitizer of content for the planet is going to go?
Thoughts are worth exactly the price you paid for them… I enjoy the blog and the discussion here a lot.
Cheers,
Bill
Comment by Bill -
Good post, but I don’t think google would just go up and spend 1.6B without thinking about the consequences.. 10 years from now google will probably own half the world. If they buy Hershey, the won’t have to spend any money to change the name of Goobers will they? 😛
Comment by jason -
I think assuming GOOG is infallible in their strategy is a mistake. They have failed to gain much traction with a large number of their INHOUSE products. Look at base.google.com, gtalk and many others. their only inhouse decent product used to be search. maps.google.com was the only other one that gained traction – it had been acquired by them though not built inhouse. One thing to know for sure they are going after traffic at every cost to sell ads. Their business model so far is same I think. Sell ads. For many users I see the cost of shifting away from YouTube to anything else with similar capabilities to be minimal. I do not even find YouTube’s technology to be ANYTHING out of ordinary. I think they are getting spread thin on fighting eBay with micropayments and base.google.com and base is disastrous( Try to find any laptop there). For me YouTube is nothing else but another far more centralized napster. mp3 on napster were not good enough quality vs CDs at the store, so YouTube’s videos are not HD so far but sufficient to do enough IP damage to content owners. DO not read into much there I think this acquisition is exclusively audience acquisition. No technology, no innovation, no rocket science just COWTOWING to user fads and those seem to favor content without respect for who should be credited with royalties for it. Not to mention the
porn almost videos on google that someone will soon leash out at them for soon.
Comment by Peter -
Here’s an interesting perspective:
http://www.alexa.com/data/details/traffic_details?&range=max&size=large&compare_sites=google.com&y=r&url=youtube.com#top
Now, I’m no stock market whiz kid, nor am I particularly smart at reading these new fangled graph thingies, but if I didn’t know better, I’d say that Google.com’s rate of increase has plateaued since YouTube.com took off. Is it possible that Google bought YouTube to keep on going with their eventual plans to take over the world?
Betcha wished you jumped on that bandwagon? 😛
Comment by FTP - First Time Poster -
“As it stands now, there is no DRM on all that video being offered from Google or YouTube.”
Not quite true, Google Video does have DRM (aka CRAP!) on some paid videos…
http://www.boingboing.net/2006/02/14/google_video_drm_why.html
Comment by Philipp Lenssen -
I am actually stunned that Google has the nerve to try and force their commiditization model on the creativity and talents of others. They have really “done evil” by supporting the rampant disregard for people’s rights.. funny I guess this “inside” deal in the Sequoia family could actually comeback to bite them in the ass. There are a tom of big players that are down right angry at GooTube.. in addition, look at the number of sites that are trying to monetize their videos through sites like Revver etc.. IS google so greedy as to not want creators to get paid? WOW.. I have lost all respect for Google. Booooooo.. there is NO EXCUSE for this except for greed.. bring on the lawsuits!!!!
In addition, they have set a prescedent to freely use anyone’s cotnent anywhere and anytime without regard for the creator.. I am tired of the “promotional” excuse as well.. wait until studios see there coveted 18-24 yr-old demographic disappear from TV sets and DVD players… and forget ipod video sales. Goolge has already helped themselves to thousands of copyrighted videos with millions of views..and look at what they have done with newspapers and published works.. SHAME ON THEM… This is like Micorsoft taking over our creative works..
Someone needs to stand-up to them..someone who can fight for the billions for content creators..
Comment by grazer7 -
Mark–Is the future of the much vaunted “user generated content” that we (the users) generate content to make the YouTube’s rich or Google richer?
Why would anyone do that?
Napster’s slogan is best for YouTube: Own Nothing! Have Everything! It’s freeeeeeeeeeee it’s all freeeeeeeeeee!!
NP Tom Waits “Step Right Up”
Comment by Jack Ryan -
Ken Wilbur: It’s nice to see some sanity here. YouTube may not be Napster, but it’s popular for many of the same reasons, namely that you can get content you want on demand and don’t have to pay or view advertisements as you normally would. We don’t know exactly how they plan to monetize the content and we don’t know how users will react to the method(s) of monetization they choose. They might pull it off flawlessly or they might screw it up and drive users away. And don’t forget, if a mighty Google was upstaged by a tiny little upstart named YouTube and was forced to buy it for 10 figures 19 months later, it would be naive to assume that there aren’t other online video services being developed out there that could take online video to the next level and leave Google/YouTube in the dust.
A few other comments:
– There are a lot of challenges to profitable monetization. Not all the content on YouTube is saleable and the available inventory likely exceeds demand. Most people seem to think that there’s an infinite advertising market. There isn’t. Markets are finite in size. And of course, if the ads Google rolls out aren’t profitable/cost-effective for advertisers, it won’t work.
– All those people that claim this is the beginning of the end for major media are, frankly, idiots. The vast majority of the most popular content on YouTube is produced by major media. If major media works with Google/YouTube, it’s in everybody’s best interest to make sure they make money. If major media dies, there’s nobody left to produce the content we want. Major media is getting the best of all the licensing deals (which, by the way, are fairly insignificant – they’ve done licensing deals with lots of other startups). They get to share revenues and all the burdens of monetization and hosting/bandwidth fall on Google/YouTube. It’s clear that major media is getting the better end of the deal. I have written a number of comments on TechCrunch about this. It’s a low-risk proposition for major media; the risk and burdens fall on the online video services.
– It is likely that at least one rights holder will sue. It may be smarter to embrace YouTube, but I’d be surprised if at least one company didn’t decide to try their luck with a lawsuit instead. The outcome of the lawsuit is fairly unimportant in the immediate term, as a case like this would take a while to resolve. It would be a battle that distracts Google and exposes it to potentially large liabilities, and if a settlement wasn’t reached, Google would risk a decision that sets a precedent that puts it out of business. Google may have deep pockets and top lawyers, but major media has the same, and they have something Google doesn’t: a powerful lobby. Money isn’t nearly as important as political sway.
– To Nigel: the content produced by these “army ants” you’re talking about is for the most part crap. YouTube is not popular because of the 25 million videos of bad Johnny Knoxville wannabes. It’s popular because of the professional (copyrighted) content. There are certainly talented amateurs that have popular content on YouTube. Guess what? Those people are most likely to use YouTube to build an audience and following and will then either get signed by an agency or studio or will set up their own “online channel” that they can monetize much more effectively themselves (i.e. Rocketboom).
People who are applauding Google for changing course and making this acquisition are basically applauding Google for getting beat out by a company started by two guys in garage (ironic, isn’t it?) and then feeling so pressured by all their product failures that they are forced to buy that company for an ungodly amount. Google might make it work, but what I take away is that Google isn’t so dissimilar from Microsoft, Yahoo, etc., who have all had to rely on acquisitions to drive further growth. The Google cult would have you believe that Google is a special company that is unlike any of its competitors. Today’s acquisition proved that wrong, and Google actually looks shockingly human and vulnerable.
Comment by Drama 2.0 -
Obviously, Mark is jealous over the YouTube deal. Mark, you can’t have all of the great/lucky web ideas. Take it easy… relax and get your NBA referree voodoo dolls out.
vr, Xei
Comment by Xeifrank -
The name of the game for Google is growing its advetising base. I’m quite sure the G and YT guys will find a way to integrate adsense into YT’s user generated content. Not with prerolls but with more accurate searching of videos. Lets not forget Google is the reigning King of Search and therein lies its greatest core competency. Yes, G may have upwards of 30 different products, but their core comptencies search, talent and enormous financial resources allow them to leverage almost any web phenomenom. Bottom line…Keep up the good work G
M.Knox
http://www.blacktrump4life.com/default.aspx
Comment by Martez Knox -
Uhhh to the person (Henry) who wrote that first comment. You could honestly be the dumcest person on the internet. You go out of your way to Mark Cubans blog and tell him he has no idea about “…you have no clue about the Internet business.”
He has a blog because hes famous for owning the Dallas Mavericks which he bought with his profits from broadcast.com which he sold to Yahoo for BILLIONS.
But your probably right he has no idea about this Internet thing….
Comment by Michael P -
google is buying many thousands of army ants.. each one of these content producers with their camera equipment represent serious capital..
if a person had 20 million they couldn’t hire a staff nor the equipment to generate as much content as youtube users create..
with this purchase google gets early adopters which is pretty much a checkmate on the nuevo entertainment space.
after this merger talk i walked 20 miles out to the desert because i had an idea so good that i quit my job the next day just to prevent the opportunity knocking headache. see you and me on the headlines soon.
Comment by nigel -
hmm, thanks for the interesting read, but i do have one question that has nothing to do with this, why werent you at the preseason practices at our unt campus (im a student) i was looking forward to meeting you, check out my roommates pictures in his flickr pool, hope you email me back. -kiz
Comment by Kismet I. -
google purchased users before – the AOL deal. That time to maintain eyeballs – this time to leverage brand recognition to augment their existing video business.
it’s a funny world where youtube is worth more than myspace. that of course can’t be right.
Comment by blyx -
With that big $1.65 billion price tag, you bet everyone is wondering who is going to get bought next after YouTube? Google (Nasdaq GOOG) is out of the game but there are many more buyers. I took a look at Yahoo’s directory of video sharing services, DMOZ, etc. – hey, Yahoo! Inc. (Nasdaq YHOO) is good for something too you know. They have a great directory. Here they are. My 25 sites that can be bought next in no particular order.
1) PutFile
2) Ourmedia
3) ZippyVideos
4) Vimeo
5) Metacafe
6) Veoh
7) DailyMotion
8) Castpost
9) Revver
10) VideoEgg
11) Str8Up
12) Dropshots
13) GoFish
14) VidiLife
15) Eyespot
16) StreetFire
17) Clipshack
18) VideoSift
19) Videobomb
20) vMix
21) MotionBox
22) vSocial
23) VapShare
24) Pickle
25) 247Show
http://mrwavetheory.blogspot.com/2006/10/who-will-get-bought-next-after-youtube.html
Comment by Mr Wave Theory -
I never quite understood your comparison beween youtube and kazaa. Youtube is what the internet used to refer to as “free hosting”. They have no part in the publishing or approval of the content that is posted and they seem to respond properly to any notices given to them. By pretty much every definition of the word “Service Provider” they qualify for DMCA protection.
I think google made a stupid decision paying so tremendously much for a 10 month old company, but they are desperate to gain marketshare with the “it’s hip” crowd and now they have it. For how long is really the question.
Comment by Arlo Gilbert -
Hey Mark, don’t you think Google’s pockets are deep enough to thwart any copyright challenge? It’s just like all those companies that sued Microsoft for stealing their ideas. They sued themselves out of business. Can the Disney’s, Time Warners, and Universals even afford to go after Google when their mediums are dying? This is a bigger fire under their ass to come up with a digital strategy!
Comment by Frank Z -
I didn’t take an official count, but I’d say the popular vote (here anyway) is pretty even – maybe slightly in support of the deal. There are three things that I can’t wait to see: 1) what the spike in YouTube traffic will be tomorrow (and how much of it they can sustain) 2) how long before the first serious copyright challenge is presented now that there are tangible assets to go after and 3) what this will do to the Apple / Google relationship (btw – I’m already a bit surprised that Apple hasn’t raised a stink that the Google Video Player let’s you ‘Download for iPod’ – it’s the right thing for Google [and Apple], but I still expect a company like Apple to try and shut it down.) My gut tells me that Google will regret this deal in the end. YT would have to go through a very serious crack-down to avoid the legal issues and that cleansing will drive the viewers to find it elsewhere.
Comment by Aaron -
I believe it’s a transformative move for Google and I applaud them for doing it. It’s Google’s Second Act. Moving beyond Search (although it’s adjacent) to control content and a powerful user community. The content will continue to be compelling whether it’s Donny Deutsch interviewing you or my son’s first birthday. We won’t be able to stop watching and I congratulate Shona Brown’s vision here: http://breakoutperformance.blogspot.com/2006/10/google-youtube-shona-brown-and-galaxy.html Thanks, Eric
Comment by Eric Jackson -
Google = Time Warner
YouTube= AOL
Me in 2yrs = Carl Ichan
Comment by XDA -
While I understand where you’re coming from vis-a-vis the potential for the copyright issue to blow up in Google’s face, the worst case scenario for these losses could amount to tens of millions of dollars. This isn’t a Google contention; this is a content industry contention: they’re almost self-limiting themselves before they get their lawsuits off the ground.
The potential size of a video-monetized advertising market is orders of magnitude larger than that. From a risk-reward perspective, it’s clear that Google sees this somewhat differently than you do.
It’ll be interesting to see how quickly Google moves to consolidate the relative strengths of YouTube’s service and audience with its own search/advertising model. It’ll be interesting to see how well Google is able to maintain its focus through the haze of copyright-related litigation.
I suspect a year from now we’ll all still be debating the relative merits of this very deal. Forgive me if I don’t fully agree with you just yet: I’ll watch and wait before rendering final judgment.
Carmi
http://writteninc.blogspot.com
Comment by Carmi -
Google’s latest aquisition of YouTube could be seen as the search giants attempt to consolidate its lead in the search arena. The fact is most users go to http://www.YouTube.com to look for videos that they are interested in. Because they know they will more often than not get it from YouTube rather than from Google Video or even Yahoo’s own video search. They to go YouTube because it’s videos are fast to load and it’s very easy to upload videos. As for DRM encrypted videos, i still think that there is a way for the public to view and even download copyrighted contents on the YT site. For me it’s a coding challenge and we all know how many ‘capable’ coders are there in Google. We all look at the negative implication of the Google’s acquisition of YT. But there’s lots of plus points too. Advertising is one. Google will possibly in the very near future roll out a ‘system’ in which it’s AdSense ad co-integrate with YT videos out there. Perhaps next time there will be ‘tiny’ YT clips on every AdSense ads. Imagine how many YT clips are being embedded onto web pages and blogs. Just imagine for a moment, if Google will be able to use this ‘information’ to tie-in this with the AdSense ads that are featured on the same web sites and blogs. Everyone that ‘clicks’ on the embedded YT videos will see the video being streamed, but more interestingly, the AdSense ads will ‘notice’ this user ‘behaviour’ and then ‘collects’ this info…
Sorry my brain is being overloaded at the moment. Sorry for the rambling…haha
Comment by cutebanana -
$1.6Billion dollars for a website that was created just over one year ago. And all this site does is it allows you to share your videos with everyone around the world. Wow. Talk about getting paid for an idea that can be copied by everyone and their dog.. When did buying something for the sake of hype turn into brilliant business sense? This, to me flies in the face of smart business practice.
Have we forgotten March 2000 already? The stock analysts are trying to outdo each other to see who can put a higher target price on Google. Kinda similar to what was happening at the height of the ‘Net “bubble”. All the talk today is how Google did a coup buying out YouTube.
Call me a contrarian, but where is the voice of reason in all this? This deal reminds me of that whole convergence theme created by the ginormous merger of AOL and Time Warner a few years back. Where are those stocks now? (Time Warner stock hit a high of $95 or so in 2000. It trades in the teens right now.)
Past performance is no indicator of future returns..However, if one ignores the mistakes of history, one is bound to repeat those same mistakes.
I found myself taking a look at the January 2009 Google put options with a strike price of 220 selling for $0.25. Theyre looking mighty tempting.
Comment by Copperfield Jean-Louis -
csven, I disagree that the uploader doesn’t contribute value to the copyrighted content. Without the uploader, there is no value proposition and there is no traffic. People aren’t watching user-created videos because they can listen to a song that’s available elsewhere. The uploader has added value to the song because people are willing to watch the video for its unpredictable content. Why shouldn’t the uploader participate in a small portion of the revenue generated. Without user-generated content, you have no social network. Maybe google could pull an ebay and charge a small insertion fee (read licensing fee) to post the video with copyrighted material. if the video drives traffic, then the uploader receives a portion of the ad revenue. the insertion fee could be split to pay royalties and help google cover its hosting costs. Bottom line, with the uploader’s contribution, there’s nothing to watch except corporate-produced content…which is like listening to top 40 clear channel radio. no thanks.
Comment by Christopher Peterson -
Great thoughts on the subject. There is no question why Youtube rushed to ink the deals with the music companies. And you’re right, if and when there is a lawsuit filed, there’ll be lots of them.
Comment by girl's basketball -
I really hope that YouTube doesn’t change as I really like the site. As much as I love google I don’t think the Google videos area is very nice.
Comment by Kevin -
Only time will tell what will happen. The only certainty for right now is that Chad Hurley and Stephen Chen have become instant multi-millionaires with Google stock.
If I were them I would stay on for a little while longer before cashing out their hundreds of millions and retiring to the good life. There is way too much unpredictability in this Web 2.0 business to know the future.
Comment by Krazy K -
Now, Google is bigger.
Comment by ikabon -
“Google will share revenue derived from the content with the uploader, any copyright owners, and Google of course.”
No. They’re not going to pay the uploader anything. The uploader (and possible content thief) is going to be the engine that drives more corporate profit. This is just a variation on the idea that music companies can still make money off of p2p downloads. Attention has value. And it all ties back to ad revenue.
YouTube is going to use the DMCA a let rights holders issue their notices. Only before that happens we might see the intergrated advertising. And the revenue stream might give the rights holders pause. Here’s a scenario:
Dumbsh*t dude uploads his video that has someone else’s copyprotected music playing to it. The page has ads on it. The revenue from the visits goes into a fund tied to that upload. The rights holder issues a takedown notice, only Google sends them a check – the proceeds from the ad revenue. Google takes a percentage and the uploader gets nothing. Google is happy and the rights holder is both surprised and happy. The uploader thinks he’s getting away with something but doesn’t realize he’s creating content for someone else. The rights holder agrees to a limited license on that particular upload in exchange for that check and future revenue from the embedded adsense or whatever else is on the page.
If someone uploads a music video, same scenario. Sure anyone can post it to their blog or whatever, but community is key; and that’s where the best advertising resides because they’re targetable. The sifting sites might bleed off some traffic, but there are ways to deal with that as well.
This is going to be interesting.
Comment by csven -
Do you feel like the guy who caught McGwire’s ball versus the guys who fought over the Bonds ball? You walked away with nearly three times the payoff as these Youtube guys. After taxes, they’ll be lucky to buy an NBDL squad.
Comment by Joe Corey -
Mark, I agree with you completely. I’m a Spurs fan, dislilke the Mavericks, normally read your blog to see what the wingnut thinks, but you’re spot on with your analysis here (and in earlier posts) of the YouTube so-called “business model.”
Google is losing it, flailing at too much stuff. And it pains me deeply to say that. Google once upon a time was an innovator. I think one primary cause is Eric Schmidt, their non-founder CEO. Google needs to get back to its original founders and its original personality, very much like Apple and Steve Jobs, or its mojo will be gone forever.
In closing, two words: short Google.
Comment by Joe Baressi -
Mark,
How about this unauthorized use of the Mavericks logo. Why should Google make money off of the Mavericks. You should sue Google. That would make news!
http://video.google.com/videoplay?docid=6356458336830622067&q=mavericks
Comment by Doug -
Mark,
Your analyses on this deal were quite refreshing. However, I think it is going to turn out fine for Google. The big guys will probably get into deals with Google and make their money that way. The little guys might get an opportunity to make money via ads. And the balance, sure Google gets to keep that change. A lot of it. If everyone is making money, where is the incentive to sue then ? Sure, some folks will try nevertheless.
The copyright issue is central to Google..as almost everything they deal in has to do with organizing and monetizing data…which they don’t own (web search, images, books, videos, etc). There couldn’t be a company in potentially deeper copyright trouble and at the same time better positioned than Google to deal with the issue.
Now, with Apple’s iTV and the Google/Apple/YouTube trifecta, I am looking forward to the day when I can buy the Apple iTV, and view YouTube videos delivered by Google, all on my TV.
Comment by Varun Mathur -
First off, Mark I enjoyed your article. You make great points
Second, I don’t think Google will loose any battles over Copyright issues. These sites like YouTube and Streetfire and whatever else act purely as a host. If somewhere in the Terms for listing these videos it states that the user takes full course for their actions…. Then how does it become google’s fault for the user violating copyright laws. Technically the way I see it then is they (google)are mearly just acting as a free hosting company that has a big community with lots of traffic.
Third, I think if there was an issue at hand then one of the high powered lawyers that google has would have spotted it before a 1.65 bn dish out. If they overlooked on something then major shame on Google and they will pay dearly for it.
Assuming that this will work out for Google like I think it will then they just spend 1.65 bn on something that was well worth it.
Comment by Nick P -
No doubt all of us who expressed our concern about your previous statements feel vindicated. At least, we feel that Google has validated our views on the future of online video.
You’re right, there are real copyright issues that are being figured out, but we have every indication that publishers are seeing value in places like YouTube, and consumers certainly are finding them valuable.
Comment by John -
Mark – my first reaction is “brilliant stuff from an insider”, but I also respect how clever Google is and will continue to be at re-railing the online train. Big producers will do big deals with Google as they are right now. But the growing community of small time content producers (e.g me) is a lot more willing to share and forget about copyright encumbrances *as long as you cut me in on the action*. If Google can monetize my stuff better or close to as much as I can then more power to them. I’m confident I’m speaking for 80%, and probably 98%, of the long tail. Can the other 2% sue them? Yes, but not painfully enough to stop the online video train o progress.
Comment by Joe Hunkins -
Google could have built a knockoff of YouTube (GoogTube) for $10 million tops, with better features. So why did they pay $1.6 for YT? I suggest looking at the value of the contracts YT already has with MySpace etc., as Google probably sees a lot of revenue potential that it is uniquely able to capitalize on.
Comment by Matthew Grayson -
Michael Arrington over at Tech Crunch has an interesting persepctive on the Google/YT purchase.
He speculates that since Fox isn’t among the content deals that have been annouced recently for YT, and that Fox, owners of Myspace, consider YT their competition, perhaps there could be some future united front by the studios (Universal…etc) to pull their content from YT and create their own version of YT.
It’s an interesting read:
http://www.techcrunch.com/2006/10/09/is-fox-a-factor-in-the-googleyoutube-deal/
Comment by Kat Jacobs -
I consider you my hero Mark, but I’ll have to disagree with you here. Let’s not forget that Google has been known to make the impossible possible in the past. Let’s not forget that we’re talking about the most successful .com EVER! Lets not forget that Google has top legal gurus like David Drummond in their management team.
I assure you that Google has a plan for YouTube which will definitely generate $$ for Google’s shareholders. Also, you may be exaggerating the potential legal problems facing Google. Yes, it is possible that someone will bring a copyright violation action against Google, but going as far as to say that in such event, Google will get flooded with derivative shareholder lawsuits is quite an absurd statement. Derivative shareholder lawsuits require a stringent showing of breach of fiduciary duty and I can’t imagine any of such lawsuits surviving the pleadings stage.
In the end, I say that you congratulate Google on its purchase!
Comment by Vik -
Mark,
I think you’re right. I’m amazed people seem to have forgotten about the dotcom implosion. Two billion for a site to post your videos on, including stolen videos, has everyone forgotten about Napster?
Google is buying users? Does that mean YouTube users don’t use Google?
I can’t see the upside.
Comment by Ted -
It is unclear to me how Google/YouTube monetizes the video traffic they have. Even if you take out the copyright issues, which as you have outlined are daunting, how do you sell video advertising around the wild west of YouTube content? No one knows what the next hot video on YouTube will be. As an advertiser to you want to associate your brand with that content? Are you going to blindly purchase inventory around this weeks hot soft porn video of the day?
I dont think so.
So now YouTube is back to creating pre-populated channels of news, sports, finance etc. so they can create an area that is safe for advertisers. I know a few sites that already do that, and they have additional text, images, and editorial content to go with the video.
Is the new YouTube plan to create a music video site? With ratings, user programmed stations, collaborative filtering for suggesting content? I know sites who already do that :), sites with years of experience and built up user bases. Sites that have associated editorial, text, image, oh I am repeating myself.
Maybe they should create a media portal with video seamlessly interspersed with text, images, and other content?
I dont think so.
YouTube is fun because you dont know what to expect. YouTube is hard to monetize for the same reason.
Justin Madison
Comment by Justin Madison -
The latest news about Google buying YouTube for $1.6 Billion made StockRing reconsider Google stock and try to understand the new Internet marketing strategy of this giant. We all know that Google makes its money when lots of consumers search for some products on the Internet and click on ads displayed by the company. Every time there is a click there is a fee that Google gets. So, the basic business goal that Google has right now is to direct more and more Web surfers to the pages where Google can display its ads. So far Google was trying to create such Web Hot Spots on its own hoping to create a popular product comparable to Google.com web site.
To accomplish this task the company hired a huge work force of about 8,000 people who are trying to create and improve Google products to give them away later for free to Web users. Gmail, Picasa, Google Maps, Google Finance, Google Video are all examples of such products. However, most of these efforts are not contributing at all or not enough to Googles revenue compare to its original Search web site. The basic problem that Google faces is that nobody knows what would be tomorrows new hit thing on the Internet so that the company could start to build it today. If we look at the latest examples, web sites such as Facebook.com, YouTube.com and MySpace.com all came from nowhere and quickly became extremely popular and suddenly were in the list of top 10 most visited web sites right next to Google. If Google could only predict what would be the next super popular trend on the web, it for sure could build a product better than most of its Startup competitors. However we all know that real mega stars of the Web such as Google, My Space, YouTube are super rare phenomena that is extremely hard to foresee and even harder to plan for.
The latest news from Google co-founder Sergey Brin that his company will stop creating new products and instead try to improve the old ones shows that the company changes its approach. Google management now has 35 different products on their hands but not one of them matches the success of the original Google.com web site. And this is understandable, because according to statistics Google.com was one of the hundreds of web sites that were trying to build search engines, but only Google became the real star. Unless you are developing hundreds of products your chances to strike gold like next Google are pretty slim and 35 different products is a good effort but not good enough from the probability point of view.
It looks like Google decided to change its Business development and marketing processes and stick to much more effective and quick revenue growth plan. The idea behind Googles future growth is to make sure that Google ads are displayed on the majority of the top 10 consumer oriented web sites. There are 2 main ways to accomplish it. The first way is to try to strike an advertising deal with top web sites like Google did with MySpace.com. The second way is just simply buy the Web site and the company that owns it such as what happened between Google and YouTube today. Luckily for Google it has about $10 billon in the bank to buy a few of such web sites. The second Buying approach is easier to execute but maybe expensive. However, it is one sure way for Google to grow its revenue and stay on top of its competitors who might not have enough cash to do the same.
In conclusion the latest Google move to buy YouTube gives new refreshed hopes to young entrepreneurs who dream of creating new popular Web based products and services for large number of consumers. The new formula for success is really simple: 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.
Comment by Eric Katsov -
Hey Mark –
All of this tech talk about ‘dark networks,’ posting by proxies, DCMA…
The first thing that came to my mind was, did you really grab effingreat.com? (You did) The second thing was, how come I didn’t think of that domain? The third was, is that effinggreat.com with one ‘g’ or two?
I am now the proud owner of effinggreat.com (2 ‘g’s),
I will let you know if there is a ton of overflow traffic and if there is than we can talk business.com type of $ for a transfer -or maybe just a pair of Mav’s tickets and a beer.
Now I have to start building my effinggreat empire!
Comment by Hexagontaginal -
It’s suddenly clear why Google bought Youtube: it’s their answer to sites like Revver which offer compensation for user uploaded content. Google will share revenue derived from the content with the uploader, any copyright owners, and Google of course. A simple solution to the potential growth of revenue sharing video sites. Smart!
Comment by Christopher Peterson -
Mark. This isn’t P2P and the YouTube product isn’t going to be out of business if copyright holders want their stuff off of YouTube. DMCA provides a system and G/YT can certainly beef up their processes to make sure that happens in a timely fashion.
This is a big and huge win for Google (and I have been a vocal critic of their product strategy) as it gives them a legit product outside of classifieds something their homespun products have not done.
Comment by Narendra -
What if people start using proxies to anonymously upload/download content? That’s gotta suck for the companies.
Comment by configuration -
Speaking of copyright and all that, anyone hear of Vongo? I wonder how unlimited movie downloads are allowed when there’s so much royalty to be paid.
Comment by business -
Google is in the web traffic business and a company with a graph that looks like this is a gem:
http://www.alexa.com/data/details/traffic_details?&range=1y&size=large&compare_sites=&y=r&url=youtube.com#top
Comment by Antonio Howell -
Mark,
Another thing to remember is that Google has for years been rumored to be buying up lots of dark fiber. My understanding (from reading various places on and offline) is that Google’s datacenter is massively distributed – may appear functionally to be “centralized” but in practice it is spread out over many different data centers around the globe with massive redundancy.
I suspect that migrating YouTube’s servers to the Google data centers (and to Google’s fiber where they have it) will very significently ease the bandwidth costs YouTube experiences.
It is still very early for video and other content on the web – but clearly we are at the beginning of a very dramatic shift in consumer’s entertainment patterns. I’m certainly not a typical consumer, but in the past year I have sold my TV and while I still go see movies at Theaters, I no longer watch TV at home, though I do download many podcasts (about 400mb/day or so) and watch videos/clips on YouTube and other sites.
In the future, I definitely forsee using tivo-like devices through my computers to download content I’ll enjoy and watch it on my own schedules, along with continued and growing use of downloaded content such as podcasts. For live events I already listen to many over the Internet (being in San Francisco it is often hard to catch the Bears when they are playing)- and I fully expect to fairly easily in the near future be able to get live streams for just what I am interested in (perhaps for a fee and certainly with commercials) on demand without buying the bundle of channels I’ll never use.
Shannon
Comment by Shannon Clark -
It doesn’t matter that it’s short clips – there are all kinds of copyrighted materials in use with these videos and with that comes all kinds of violations, especially when the video is combined with unlicensed music, such as a montage from Grey’s Anatomy to some nu-metal rock song that I can’t remember the name of. Not only could ABC sue, but so could the RIAA.
What makes anyone think that ABC, CBS, or any other broadcast network isn’t going to get tired of policing this stuff for takedown notices? Or the RIAA? Why shouldn’t they then seek judicial intervention?
I’m sure that Google’s peeps have thought it out but obviously we don’t weigh the risks and consequences the same. There is going to be some litigation eventually that will tell us where it’s all going, and we’ll know then if it was a good investment.
Comment by Sharr -
1.6-billion is a bargain. Google will now compete with the cable and satellite companies. For example, they can host full episodes of the Daily Show similar to the way iTunes does now. All copyrighted material will be subscriber based.
Comment by fast eddie -
Does anyone know what percentage of searches on Google are for video?
Anyone want to guess how fast that percentage will increase?
When will I be using Google search on my television instead of the same 8 year old interface from my monopoly cable company?
Comment by Tom McCann -
Well Mark,
Like your self I don’t think the video sharing market is mature enough to have one company acquire another.
I am still waiting for a press release by google telling us is an Aprils fools gag. But, I just checked my calendar and todays not April 1st.
If YT did make their money is time that the take that money pay their taxes and bring out the next generation of social networking sites.
Only time will tell I guess. But, I did enjoy your post.
Dave Mora
http://www.eunknown.org
Comment by Dave Mora -
Please join us in the collaboratively filtered realtime discussion:
TOPIC: google youtube
START TIME:
2006-10-10 , 00:00 CEST (Brussels, Paris, Rome, Madrid, Stockholm).
2006-09-10 , 23:00 BST (London, Dublin, Lisbon).
2006-09-10 , 18:00 EDT (New York, Detroit, Toronto, Montreal).
2006-09-10 , 15:00 PDT (Vancouver, Los Angeles, Tijuana, Yukon).
TO JOIN:
go to the following url:
https://www.synthetron.com/account/tag/conversation/googleyoutube
Confirm [yes] to the security warning and follow the instructions.
(In some companies a proxy login dialog box will appear. You then need to type your company internet username and password).
YOU NEED:
A Java plugin installed on your browser.
Comment by synthetron -
Everyone wants to take some pieace of big Google’s pie. But they don’t care, that Google has big lawyers team
Comment by Manager -
1.6-billion will turn out to be a bargain for Google. While everyone’s going goo-goo over YouTube, do you realize how much video is not online? Google will make the push towards putting all the world’s video online…Stay tuned.
Comment by Ken Leebow -
Oh and Mark, count me in for helping on you file hosting/sharing idea…solid plan, might be able to get $1.75B for it in 18-24 months (I’d try and get some cash w/stock rather than an all stock deal).
Comment by marc -
Mark,
Thanks for the intriguing posts over the last few days re Google. Good reading. Only time will tell whether or not this deal bears fruit but I find your posts a refreshing alternative to the CNBC bobbleheads and the mindless drivel spewed from the media tripping over themselves to cover it ad nauseum. An alternative view is hard to find and I thank you for that.
Cheers.
Comment by Steve -
This is the first time G has bought “users” it’ll be interesting to see how/if they can maintain the “coolness” of YT. Time will tell, I’d says it is still 50/50 on if this was a good move or not.
Comment by marc -