October 10, 2006 – (HOSTSEARCH.COM) – The media is hot with news of Google’s confirmed purchase of YouTube for a cool $1.65 billion. A 20-month-old startup (others call it an “upstart”!) with 60 employees and a one-room office space, YouTube is a free website that allows people to share homemade videos. The site has very quickly become a major draw with around 30 million visitors a month watching 100 million video clips daily. Google’s own video service exploits only 10% of the available market and its acquisition immediately makes it the key player in online video distribution.
With YouTube Google is not only buying into a great video site, it is embracing a skillful marketing tool that exploits the popularity of websites with social contexts (Myspace, HiFive, etc.). Such sites leverage the concept of online community and bring people back to sample their wares time and time again. Despite the potential benefits of the purchase, Google’s acquisition might not though come without problems.
Alongside the countless homemade videos hosted on YouTube are equal numbers of copyrighted videos – clips from films and TV programs – all of which have been posted by users and all of which represent a potential lawsuit. Now that one of the world’s most “cash rich” companies has taken on YouTube, the effort involved in taking copyright issues to court might seem more worthwhile with a potentially lucrative payoff in sight. Google has though clearly listened to its analysts and adopted a strategy that is designed to stave off such issues.
Warner Music and SONY BMG MUSIC ENTERTAINMENT have both announced strategic business relationships with Google and will allow the company to stream their video content on a revenue sharing basis through an advert supported website. Thousands of music videos, artist interviews and movie clips will be made available to Google and no doubt more companies will follow suit. The question now is whether this upgrade in content will impact the communities that have built around YouTube and dilute the site’s appeal.
YouTube is without doubt monumentally cool. The fact that anyone of whatever age can capture their moments in history and broadcast them to a willing audience is what drives YouTube’s cool factor. Whether poor quality videos of underground band concerts can sit alongside polished offerings from the latest boy band performances is yet to be seen. If not, the allegiance of YouTube’s hordes might be in doubt and other noncommercial websites could well become their point of destination. Unless careful attention is paid to the audience that made YouTube such a success, Google might well be left with a potentially expensive lame duck on its hands.
