Corante Media Hub



Google-YouTube Purchase Raises Concerns

Posted by Tish Grier

Both MSM and the Blogosphere have been buzzing since last evening's announcement of the $1.65 billion purchase by search giant Google of popular video upload site YouTube.

In the MarketWatch report on the sale Google will allow YouTube to "operate as a separate entity" with its own employees remaining in the YouTube offices in Silicon Valley. What sold the YouTube guys on the deal was, according to YouTube founder Chad Hurly was ""revolutionary ad program that inspired us." Plus, he added, "we wanted to remain independent. By working with Google, that's still the case."

Mark Cuban, who wrote last week that he thought Google "would be crazy" to buy YouTube due to
questions of legal liability stemming from the Digital Millenium Copyright Act ,still thinks Google is crazy. Pondering the impact of the sale: "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 aren't 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."

Umair Haque speculates on the enonomics reasons for the purchase: 1) Google has to amplify (and protect) it's key revenue stream - ppc. Video ppc is a higher value domain, and a hugely untapped one.

2) Google wants assets at the edges of the value chain which can exert market power against 1.0 publishers - just like it's doing in book search.

The more of these assets it has across media markets, the greater economies of scope it can ultimately realize; the flipside of these scope economies is, of course, the more market power it can exert.

In other words, Google's goal is to redesign a more efficient value chain.

3) Google Video failed miserably."

Terry Heaton sees how Google's acquisition is creating a new kind of scarcity by aggregting many "pieces" of media as possible in one place":" Why does this work? Because there are far more people creating content than there is time for people to consume it. Therefore, trusted, smart filters (or smart aggregators, as I call them) become desirable."

A broadcaster's best new media strategy, he explains, would be " to make our content available everywhere. . . because we want our content to be where the eyeballs are. In so doing, however, we need to understand that we're feeding the beast that will ultimately destroy us. This is only acceptable if we move quickly to create our own local smart aggregators."


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