News: Google CEO Eric Schmidt gave a revealing interview/talk yesterday to industry and financial folks. Schmidt tried to manage expectations on YouTube’s ability to earn money, saying: “Looking at the traffic, user-generated video has tremendous interest. There is a large advertising opportunity to be built on that traffic. But an old joke in the Internet is that URL stands for Ubiquity first, Revenue Later.”
Schmidt also joked about some of the perceptions that Google is arrogant and plays hardball in negotiations: “I’m sure we’re arrogant. But I have learned that as part of being a player in the media industry, part of negotiations is that everything is leaked and you are sued to death.”
Meanwhile, Viacom CEO Philippe Dauman defended his company’s decision to break off negotiations with YouTube, but left open the possibility of securing a deal: “We may do a deal with them someday on terms that meet our criteria or we may not.” Dauman couldn’t resist taking a potshot at YouTube’s user-created content: “People aren’t going to spend money for user-generated content like a cat going to the bathroom.” More here and here.
Analysis: There’s a lot of posturing here by two heavyweights. Dauman’s quote about the cat videos is funny, but you shouldn’t underestimate the appeal of user-created content. In fact, the majority of YouTube’s most watched videos are from ordinary users creating their own videos. I think a lot of the appeal about YouTube is that it doesn’t provide all the same stuff on TV.