Val’s Art Diary hits Wall Street Journal

November 27, 2007

NewsVal’s Art Diary was featured yesterday in the Wall Street Journal.  You can find the article online

Val is a talented artist who makes YouTube videos of herself painting in time-lapsed video.  Her paintings are impressive, and the videos quite charming, filled with colorful banter.  She has over 22,000 subscribers to her videos, which have been watched hundreds of thousands of time.  Val uses her videos to sell her paintings on eBay and her own website; according to the figures in the article, Val has made thousands of dollars from selling her 49 paintings. You can watch her latest video below.

Analysis:  The Wall Street Journal article doesn’t say much about Val, but what it does say is informative.  We learn that Val is Valentina Trevino.  If I’m not mistaken, that’s the first time Val’s Art Diary has been revealed by her full name in print.  Also, Val is 29 years old and a “Chicago” artist.  Hmm…for some reason I pictured Val in LA! 

I’ve been following Val’s videos for some time.  Her videos definitely are among the best, most creative user-generated content that YouTube has to offer.  Go watch them!


Henry Blodget on YouTube’s business

September 13, 2007

News:  Henry Blodget at Silicon Alley Insider has some insightful analysis of William Morrison’s analysis of Comscore’s recent data on Google and YouTube.  (Sorry for the double hearsay.)   Here’s the good and the bad for YouTube:

The good:  YouTube accounts for 28% of the total minutes spent on Google sites.

The bad:  YouTube’s profit margins are still very low compared to other Google services.

According to Blodget, “The bigger YouTube gets as a percentage of users and minutes, the more Google’s profit per user/minute is likely to drop.”

Analysis: All of these numbers can shift if YouTube’s InVideo ads actually attract advertisers.  Google is banking on this new system to generate revenues for YouTube.  Of course, the copyright lawsuits against YouTube could throw a major monkey wrench into these plans, particularly if YouTube suffers a major defeat in one of the bigger cases.


YouTube about to launch news videos with ads

September 13, 2007

News:  Google VP David Eun was in Korea for the  Dicon 2007 conference.  He announced that YouTube is negotiating with content providers to feature news videos on YouTube, which will be synched with relevant InVideo ads as a part of revenue-sharing deals.  (More)

Analysis: This makes sense on both sides.  News organizations are hurting for revenue, given the Internet’s popularity and ability to make news free.  YouTube needs “safe” videos (not copyright infringing) that will appeal to advertisers whom YouTube wants to attract to its site.  It will be interesting to see, though, if people watch news on YouTube, especially if it comes from mainstream media.


Is DailyMotion the French YouTube?

September 6, 2007

News:  The French-based DailyMotion just received $34 million in additional funding.  Some tout it as the “French answer to YouTube.”  So far, DailyMotion has avoided being sued for copyright infringement that have saddled other sites.  We’ll see how long that lasts.  (More)


YouTube’s business plan — revealed

September 4, 2007

News:  Here are my preliminary thoughts on YouTube’s business plan, i.e., how it hopes to make a profit.

1.  Continually attract millions of viewers, users, and video creators to YouTube

2.  Join forces with Google to incorporate YouTube videos in all basic Google searches (thereby helping to serve No.1 priority above), and to deploy Google ads on YouTube’s site.  (Because of potential secondary liability under copyright law, Google ads can’t be fully integrated on YouTube, particularly not with videos that constitute copyright infringement).

3.  Strike revenue-sharing deals with key “partners” of YouTube who are under contract with YouTube and who supply content to YouTube; such quality content more likely to generate views and more desirable for ads

4.  Deploy sleek ads within and at bottom of select videos (“InVideo ads”) created by YouTube partners (some individual creators and some corporate creators).  This last prong is what YouTube is testing out right now, and what YouTube is banking on.  Higher click-through rate for these ads means YouTube can charge more for these ads than regular Google text ads.


YouTube shuts down InVideo pop-up ads in YouTube videos

September 4, 2007

News: As far as I can tell, YouTube has shut down the InVideo pop-up ads that it started deploying back in July. I can’t find the pop-up ads anymore on the partner YouTube videos that first had the ads, such as LisaNova, Smosh, and My Chemical Romance.

Analysis: There are several possibilities about what YouTube is doing: (A) YouTube’s rethinking/reworking the ads in light of YouTubers’ mostly negative comments submitted on YouTube’s blog; (B) YouTube’s afraid of VideoEgg, which claims to have developed the ad technology first and applied for a patent on it; and (C) YouTube’s just gearing up for a full deployment of InVideo ads (the earlier ones were a test run).

I think the correct answer is probably (C).

Meanwhile, a Google rep is quoted in papers today touting the success “hit rate” of the InVideo ads, which get “between five and 10 times as many” clicks “compared with the number who view regular display ads — banners or boxes on Web pages.” (More)


Hello to Hulu, the YouTube killer from NBC + FOX

August 30, 2007

News: NBC and Fox have joined together in an online video project that has been nicknamed “the YouTube killer,” reflecting at least the intentions of its creators. Yesterday, the project announced its name — “Hulu” — on its website (still in beta). Jason Kilar, the CEO, even writes to explain the name: “Why Hulu? Objectively, Hulu is short, easy to spell, easy to pronounce, and rhymes with itself. Subjectively, Hulu strikes us as an inherently fun name, one that captures the spirit of the service we’re building. Our hope is that Hulu will embody our (admittedly ambitious) never-ending mission, which is to help you find and enjoy the world’s premier content when, where and how you want it.”

Michael Arrington of Tech Crunch humorously points out that “hulu” means “butt” in two languages and “cease and desist” in Swahili. Salon points out that all names rhyme with themselves, so that’s no reason to pick a name.

hulu.jpg

Analysis: Hulu will focus on providing “premium” or “quality” video content from TV shows. It won’t include amateur, user-generated videos (as I understand it), so it’s hoping that viewers will prefer “premium” content over the amateur stuff on YouTube. Whether that strategy will be enough to compete with YouTube’s huge lead in user base, only time will tell. I think it will be an interesting battle to watch. I do like the look of the Hulu website so far, so at least they’ve hired some decent design people.

As for the name “Hulu,” I think if you have to explain it, it ain’t that good.


YouTube strikes licensing deal with British music publishers + songwriters

August 30, 2007

News: YouTube struck a major deal with MCPS-PRS Alliance, a British collecting society that represents 10 million musical works on behalf of their publishers or song writers. Under the deal, YouTube will pay a flat fee for use of the musical works on videos on YouTube by its users.  Terms of the flat fee were not disclosed. (More)

Analysis: This is an incredibly important deal for YouTube to stave off more copyright lawsuits. Now it needs to do the same thing with all the U.S. music publishers suing it. As a business strategy, I find it hard to believe that YouTube would only strike this kind of deal with the UK music publishers. If YouTube is able to secure similar deals with the U.S. music publishers suing it and to settle their claims, the copyright lawsuits against YouTube would certainly become less worrisome (reducing the potential scope of liability).


South Park creators score $75 million deal w/ Viacom

August 28, 2007

News:  South Park creators Matt Stone and Trey Parker just signed a $75 milllion extension with Viacom.  Part of the deal gives the pair 50% of revenues generated on a new South Park website (which will have videos).  Viacom is, of course, embroiled in a lawsuit with YouTube over the posting of unauthorized clips from South Park and other Viacom shows.  (More)

Analysis:  The sharing of Internet revenues is an interesting development.  Right now, the amount of revenue probably will be small (especially compared to television).  That may change one day, perhaps sooner than we expect.


Robert Scoble of Scobleizer blog loves Google/YouTube deal

May 18, 2007

News: Robert Scoble has one of the most read blogs on WordPress, which is pretty amazing because he only writes about tech stuff. He’s a former Microsoft guy who now works at PodTech.net. When Scoble talks, people in the tech world listen.

Yesterday, Scoble gave his strong approval of Google’s acquisition of YouTube. Scoble admits that he didn’t realize the business sense of the deal until now:

“By putting YouTube results into Google’s main engine Google ensures it will have better searches than Yahoo and Microsoft (who were, truth be told, getting damn close to matching Google’s quality). And it does it in a way that Yahoo and Microsoft will not be willing to match. * * * Microsoft still treats each team as something that must make money. Google doesn’t do that. They didn’t care one bit that YouTube didn’t have any revenues. They knew that there’s other ways to make money off of YouTube than to force YouTube to monetize on its own. * * * It also is even more worth putting up with billions of dollars of lawsuits.”

Analysis: YouTube, then, is another database for Google search–a database that no one else has. Brilliant. Just don’t let the YouTube community know that they are just another Google database.  They wouldn’t like that description.


Will YouTube settle?

May 9, 2007

Regular readers of this blog know that I’m generally in favor of businesses being able to work out deals instead of suing each other. In YouTube’s case, I was happy to see it avoid lawsuits while it secured partnership deals with Sony, Universal Music, CBS, BBC, NBC, NBA, NHL, and others.

Now that YouTube faces 3 copyright lawsuits (Tur, Viacom, Engligh Premier League/Bourne), I am growing less optimistic that a business deal can resolve these disputes. A settlement won’t prevent someone else from suing, and, now that the door’s been opened, other copycat lawsuits may follow. (Ironically, copyright lawyers can freely copy the factual allegations in the earlier filed court pleadings.) Sure, Google’s got a lot of money, but I don’t think it wants to keep scuttling back to court over every unauthorized clip that surfaces on YouTube that someone complains about. Google is probably not one that caves in easily. When you are worth over $150 billion, you don’t have to. These cases could have been disastrous for YouTube, if Google hadn’t acquired it last October.  Now they may just be the cost of doing business in this new online video market.

And even if YouTube could settle with one of the plaintiffs, there’s no guarantee that the another one of the plaintiffs wouldn’t just hold out and try to win either on principle (maybe Robert Tur?) or for the hopes of winning big bucks (the proposed class action by Engligh Premier League).

So will YouTube settle? It’s very unlikely, now.


YouTube made $15 million in revenue last year

March 6, 2007

News:  Ellen Lee has an excellent article on “Google moves YouTube ahead:  since the acquisition, more deals struck with video, though copyright issues remain.”  In the article, it’s revealed that YouTube brought in (only) $15 million in revenue.  That’s more than 100 times less than the amount ($1.65 billion) Google paid to buy YouTube. Of course, YouTube is only 2 years old, so no one should expect it can bring manna from heaven.


Does YouTube deserve a C- for its dealmaking?

March 5, 2007

News: Washington Post writer Sara Kehaulani Goo has written an article titled “YouTube struggles despite dominance.”  According to the article, Josh Bernoff of Forrester Research said, “‘I give them a C-minus [in dealmaking]. When you negotiate with a media company, you have to demonstrate respect for their content.” He said YouTube needed to use more sophisticated technology to prevent the unauthorized uploads, which would in turn help foster more trust between YouTube and the media companies. ‘There is software out there — it’s not perfect, but it’s out there.'”

Analysis:   I agree there were a few hiccups in the past month with YouTube.  Lost deals with CBS and Viacom, plus rumblings from Universal.  But Google CEO Eric Schmidt did seem to right the ship by his public comments.  And I still think it’s significant no big media content provider has sued YouTube yet.  This may be because, as Scott Kessler of Standard & Poor’s said, “If these companies want to distribute their video content online for free or supported by advertising, they need YouTube more than YouTube needs them.”


The YouTube business model — is this Web 3.0 already?

December 5, 2006

News:  At the ITU Telecom conference, Cisco CEO John Chambers predicted that businesses will follow the YouTube model in facilitating and promoting user generated content.  Chambers suggested that we haven’t seen nothing yet in terms of the potential for businesses to foster user created content.   “That’s our children – wait ’til we get hold of it. We will change business models on this. In the future it will be about producing it yourself” as businesses develop technologies that serve as collaboration tools.  (More from CNET)

Analysis: This is a pretty bold statement from the CEO of Cisco.  I would love to see what Chambers says happen.  If more businesses develop technologies to promote user created content, that would be great for society.  Of course, the new technologies, whatever they are, must allow for sufficient breathing room for users to create their own stuff.  Otherwise, there’s a danger that a big business-driven environment for “user” created content will end up being nothing more than big business’s creation.


Wired on YouTube

November 30, 2006

News: Wired’s December issue is on the newstands and it features YouTube on the cover, with a picture of Lonelygirl15. There are 2 excellent articles, (1) one about the YouTube phenomenon and (2) the other about Lonelygirl15. Wired’s website even has a video of the photo shoot with Lonelygirl15 (actress Jessica Rose).

cover14_121.jpg

Analysis:  Both articles are great reads.  I recommend both if you follow YouTube.  One thing I still don’t understand:  what exactly was or is the fascination with the Lonelygirl15 character??  I’ve surfed through some of the many Lonelygirl15 videos and yawned.


Will Google go up to $600 per share because of YouTube?

November 15, 2006

News: Is this irrational exuberance or what?  Credit Suisse (which had worked on the YouTube deal, but now can cover Google since the deal is done) has an analyst Heath Terry, who set the target price of Google at $600/share (it’s currently at $491.93/share.  Terry explains (see ZDNet):

The YouTube acquisition is certainly not without its own risks. The most significant issue facing Google following this acquisition is the potential for a deluge of litigation concerning copyrighted content on YouTube. A protracted legal battle in the courts could result in millions of dollars of legal expenses and settlement outside the courts is also a possibility. The worst case scenario can be seen in the fates of companies like Napster and MP3.com. Our analysis of the top 100 most viewed videos so far in November indicate that under 35% of these videos (by total views and number of videos) potentially contain contentious copyrighted material. This means that the majority of videos on the site are truly user-generated content. As a result, we believe the impact of Google/YouTube removing copyrighted content may be less than feared. However, it is unclear how much of YouTube’s traffic comes to site primarily for copyrighted content rather than user-generated videos.

Terry’s bet: The monetization of YouTube will outrun the copyright gnats. His price target for Google: $600.

Analysis:  Wow.  The stat on the percentage of user-created material that is the most popular (65% of the TOP 100 videos) is pretty amazing.  If true, it shows the huge potential for ordinary people to find viewers of their works on YouTube.  


The business of stupid videos: Is Stephen Colbert right about YouTube?

November 15, 2006

I will be giving a talk to law students at my school on Wednesday.  The title of my talk is noted above.  We will be discussing this video of Stephen Colbert about the YouTube “ripoff.”  (Warning:  the video contains footage of two acts of stupidity and some graphic violence involving a guy hitting a person on the head with a shovel.)   

If you have any opinions on this video or the following questions, I’d love to hear them:

1.  Why is YouTube so popular among users?  What’s the point of posting silly videos online?

2.  How should major copyright holders, like the movie and music industries, deal with people posting clips of their content without authorization on YouTube?  

3.  Is YouTube really worth $1.65 billion?

UPDATE:  In the “rip-off” clip, Stephen Colbert joked about having Colbert Report clips up on YouTube, even though Viacom, his parent company, asked some to be removed.  Now, ironically, Viacom or the Colbert Report asked that the same video clip in which Colbert makes fun of Viacom and others over the use of his clips to be removed from YouTube.   “Rip-off” is now available on Comedy Central’s site here.


Business: Sun Microsystems tells employees to make YouTube videos — what?!

November 8, 2006

News:  Sun Microsystems (which encourages its employees to blog) has set up a contest for its employees, asking them to make the best YouTube video to advertise Sun products.  Below is Executive VP of servers John Fowler discussing the contest.  (More from ZDNet)

Analysis:  This sounds like fun.  I imagine Sun has lots of techie people who can come with creative ads or at least videos.  Whether the contest will work in promoting Sun products, it’s hard to say, though.  Some YouTubers might see this as a corporate infiltration of their site and peer production.


YouTube on demand + on cellphones

November 7, 2006

News:  WSJ reports that YouTube is nearing a deal with Verizon to offer YouTube videos on Verizon’s cellphones and also on demand on its cable service.  (More from Reuters)

Analysis:  This would be a great deal for YouTube, but just how many silly videos can a person watch in one day?


Is Google CEO Eric Schmidt the key to YouTube’s success?

November 5, 2006

News:  Now that the FTC approved Google’s acquisition of YouTube, it will be interesting to see how much power Google CEO Eric Schmidt wields on behalf of YouTube, behind the scenes.  In a quote by the Wall Street Journal this week, the 29-year-old CEO and co-founder of YouTube Chad Hurley seemed perplexed by the negotiations with the movie and music industries:  “It’s such a mess because the [entertainment companies] have all of these valuable assets that are just locked up with so many people who need to sign off on them. I don’t know what it requires, if the government needs to be involved,” Mr. Hurley laughs. “I don’t know.”

Friday, however, Google issued the following statement:  “The Internet offers real opportunities for media companies to reach a wider, global audience and to interact more directly with users.  Google is always talking to potential partners about how to make the most of the opportunities provided by the net.”

Analysis:  Although YouTube will retain its corporate identity and co-founder Chad Hurley will retain his position as YouTube’s CEO, the statement by Google strongly suggests that Eric Schmidt is wielding his influence in negotiations with the movie and music industries.  This is no knock on Mr. Hurley, who appears to have done a very respectable job so far, especially in securing the Google deal.  But Eric Schmidt is a Silicon valley veteran, with “street cred” that is beyond doubt: an engineering PhD, a founder of Sun Microsystems, and former CEO of Novell.  Schmidt was brought into Google when the venture capitalists who had invested in Google were clamoring for a more experienced businessman to help co-founder twenty-somethings Sergei Brin and Larry Page run Google.  In other words, the 51-year-old Schmidt helps to provide the “adult supervision” thought by investors to be necessary for a young, fast growing company.  And so far he has. 

Eric Schmidt, CEO of Google, on the YouTube acquisition


Comedy Central decides to leave many clips on YouTube

November 1, 2006

News:  Sarah Hall of E! Online has the inside scoop about Comedy Central’s recent decision to ask YouTube to remove some unauthorized clips of the Daily Show, the Colbert Report, and South Park from YouTube.  Turns out that Viacom, Comedy Central’s parent company, decided to remove some, but not all, clips from YouTube — which explains why many clips are still up on YouTube (as I reported here over the weekend).

Viacom stated: “We want our audiences to be able to access our programming on every platform and we’re interested in having it live on all forms of distribution in ways that protect our talented artists, our loyal customers and our passionate audiences.”

Analysis: From a business standpoint, I think Viacom’s multi-platform approach makes a lot of sense.  If YouTube garners milions of eyeballs each day, it would be stupid to have all the clips removed from YouTube.  While Comedy Central is building its own website with video clips, the library does not yet appear to be as large as what YouTube had.  Also, I don’t think the clips of Comedy Central shows on YouTube amount to a net loss for Comedy Central.  Comedy Central gets a benefit from free advertising on YouTube to pump up the popularity of their shows (this could be considerable), while Comedy Central loses the ability to package those clips on its own site, or attempt to license those clips to YouTube.  In the end, Viacom decided here to “split the difference” and allow some, but not all, clips on YouTube to remain there.  


What Mark Cuban doesn’t get, Part 2: music studios buy into YouTube

October 20, 2006

News: NYT’s writers Andrew Sorkin and Jeff Leeds have detailed more information about the 3 majors deals YouTube struck with the recording studios Universal, Sony BMG, and Warner Music on the same day as the Google deal.  In exchange for allowing their music to be used by YouTube users, the recording studios each received a small stake in YouTube.  According to the NYT reporters, “Indeed, people involved in the discussions said that the music companies rushed to complete the deal ahead of the YouTube deal, in part so that it could benefit in the jump in YouTube’s value.”

Analysis:  I don’t want to sound like a broken record (pun intended), but Mark Cuban’s prediction that YouTube will suffer the same copyright demise as Napster has proven to be wrong, again and again.  When 3 of the 4 major recording studios have bought a stake in YouTube, that’s a powerful sign of how those music copyright holders view the legitimate business potential of YouTube. 

Related post

Business + Web 2.0: What Mark Cuban doesn’t get

Universal Music agrees to deal with YouTube, ending threat of copyright lawsuit


YouTube is now a verb and an adjective

October 18, 2006

News:  Wall Street Journal writer Lee Gomes has an excellent article discussing how “YouTube is now a verb and an adjective“–great title!

For those still questioning the YouTube-Google deal, this is a must read.  One key point:  “Instead, Google is getting an awesome brand name, and the eyeballs that come with it. It’s one of the ironies of the current Internet that success is often uncorrelated with a company’s R&D budget or the number of programmers on its staff. As proven with social networking sites such as MySpace, what makes for success is often being in the right place at exactly the time that a particular fad breaks your way.”

Analysis: The grammatical discussion of “YouTube” as a verb and an adjective provides nice symbolism of how pervasive YouTube has seeped into everyday culture.  Gomes is exactly right that a bunch of other sites do exactly what YouTube does, but without YouTube’s success in attracting users.  Being the First Mover in a space is always an advantage, particularly if you do it well. 

Gomes also makes a good point in questioning why major copyright holders are failing to capitalize on the video craze right now.  In my last post, I discussed how South Korean shows freely disseminate clips of their programs on the Internet.  Why aren’t NBC, ABC, CBS, and Fox exploring that marketing strategy more aggressively?


Business + Web 2.0: What Mark Cuban doesn’t get

October 16, 2006

News:  Over the weekend, a couple articles came out explaining favorably why the Google-YouTube deal makes sense, and why we’re unlikely to see YouTube suffer the same copyright demise as Napster.  Here are some of the highlights:

1.  The Sunday Times (UK), Google helps media giants see YouTube’s way

Some senior media executives argue that these are signs that lessons have been learnt since the Napster debacle. The free song-swapping website was crushed by legal action by the music industry, but this failed to stop enormous web piracy.

“If we had licensed Napster we could have saved ourselves billions and got a real head start in digital music,” one music executive said. “But as usual the lawyers had the loudest voices.”  If there is money to be made, media companies are happy to share content as long as they get their slice. “It is innovation over litigation,” said Michael Nash, senior vice-president for digital strategy at Warner.

2.  Michael Geist, Toronto Star, Why YouTube won’t be Napster redux

Lost amid discussion of YouTube’s staggering price tag was the fact that hours before confirming the sale, Google and YouTube signed a series of licensing agreements with some of their harshest critics. Companies such as Universal, who only weeks earlier had mused publicly about suing YouTube, agreed to the very revenue sharing arrangements that eluded Napster.

While some media companies, including Time Warner, speculated publicly late last week about possible lawsuits, it is worth examining why YouTube appears to be succeeding where Napster failed. At least three possibilities come to mind. * * * The best explanation may well be that seven years after Napster’s debut, the world views the value of Internet-based distribution through a much different lens.

In 1999, Internet distribution focused on the use of law and technology to control content and dictate terms of use. That control has proven notoriously elusive with consumer backlash against technological and legal controls and emergence of highly efficient user-based distribution models.

Furthermore, it is Internet advertising revenues — not Internet controls — that today hold the promise of billions of dollars in revenue. Indeed, the Internet economics of 2006 have shifted so dramatically that later this fall the recording industry is planning to launch SpiralFrog, an ad-supported music download service that offers free music downloads (albeit with restrictive technological limitations).

3.  David Carr, New York Times, Idiosyncratic and Personal, PC Edges TV

One of the panelists, Jeff Zucker, chief executive of NBC, was asked what he would do if he found out that YouTube had run a piece of copyrighted NBC material. “We will claim outrage, demand that it be taken down and then check back in a week to make sure it has been done,” he said. His sly-devil acquiescence is informed by YouTube’s ability to take a Saturday Night Live skit called “Lazy Sunday” last year and market it to more young people than have sampled S.N.L. in years. * * * Television, it seems, may have learned some of the hard lessons endured by the music industry and taken an attitude of cautious engagement with downloaders rather than randomly slapping them with lawsuits.

Analysis:  I’ve always thought winning the Napster litigation was a Pyrrhic victory for the music industry.  By closing the first and most popular music file sharing site, which boasted over 70 million users and a substantial lead time over competitors, the music industry very likely made it more difficult to stop infringement by scattering all those users to many different services and software platforms.  I’m glad to see now that one music executive has finally admitted as much. 

Granted, it’s a matter of speculation whether Napter and the music industry could have struck a deal to work together back in 1999.  But I submit as evidence the fact that Napster was later reborn, with the blessing of the music industry.  By then, though, Apple and iTunes had become the No.1 online commercial site for music.


Microsoft CEO Steve Ballmer questions (or covets?) YouTube deal

October 12, 2006

News:  BusinessWeek has an interview with Microsoft CEO Steve Ballmer, and the hot topic of discussion is, what else, the YouTube-Google deal.  Ballmer states:

“You’ve got to ask] could Google do whatever it is they’re hoping to buy without paying $1.6 billion? Is YouTube really some permanent, long-term thing, or is it a fashion?  I’m not saying it is a fashion.  But every time we do valuations, I wonder if we can keep this hot for 10 years. . . . Right now, there’s no business model for YouTube that would justify $1.6 billion.  And what about the rights holders? At the end of the day, a lot of the content that’s up there is owned by somebody else.

“The truth is what Google is doing now is transferring the wealth out of the hands of rights holders into Google. So media companies around the world are all threatened by Google. Why? Because basically Google is telling you how much of your ad revenue you get to keep. They better get some competition. Us. Yahoo! Somebody better break through or you can short all media stocks right now. As long as there are two, you can hold onto media stocks. Google understands that. And that’s one reason why they’re willing to lose money up front.”

Analysis:  It’s interesting to hear Microsoft worrying now about monopolies.  It’s also eye-opening to see Microsoft trying to play catch-up in a number of areas, including search, music distribution, and now video distribution.  On the very day the YouTube deal was announced, Microsoft sent out invitations to try out the beta version of its video sharing site, Soapbox.  Initial reviews have been underwhelmed.  I tried out the site and really found the design to be a disappointment, not only in the aesthetics but also in the placement of the video player on the right hand side and not the center. 

I’m not a business expert, but I believe Ballmer is wrong to be worried about 10 years into the future.  In Internet time, 10 years is an eternity.  Companies working in this space should be thinking the here and now, what will innovate today.  Why it’s taking Microsoft so long to fully launch a video site is a bit confounding.  When you let others take a sizeable lead, sometimes you won’t ever be able to catch up.


MySpace miffed by YouTube

October 11, 2006

News:  This may sound grade school-lish, but even in the business world petty fights may arise.  According to the Wall Street Journal, Rupert Murdoch’s News Corp., which owns the ever popular social networking site MySpace, apparently was miffed by YouTube’s failure to respond to News Corp.’s email request to allow it a chance to bid on the company before the deal had been closed with Google.  As a threat, MySpace has suggested it will stop its users from using YouTube videos on its site.  (More from searchenginewatchblog)

To smooth things over, Google CEO Eric Schmidt will meet this week with News Corp. executives, including Rupert Murdoch.  Google already has a $900 million deal with MySpace to place video advertising on MySpace. (More from Australia IT)


Yahoo tried to buy YouTube

October 11, 2006

News:  In Yahoo Feels Breath on Neck, Saul Hansell discusses how Yahoo tried to buy YouTube:  “Yahoo itself tried to buy YouTube just a few weeks ago and got as close as negotiating price and terms, according to an executive briefed on the discussions. But the talks broke down, and Google swooped in and closed the deal quickly, just as it has in several recent partnership negotiations.”

Analysis:  Hansell also notes that “Google has $11 billion in cash and a market value of $131 billion, while Yahoo has $4 billion in cash and is worth $34 billion.”  Given these figures, the metaphor in the title of the article seems wrong.  It should be something like, Yahoo Feels Dust in Face.


Google-YouTube deal struck at Denny’s

October 10, 2006

NYT writer Andrew Ross Sorkin provides a fascinating account of how the deal between Google and YouTube was struck.  Basically, the discusions started at a Denny’s near YouTube’s offices — yes, Denny’s — in San Bruno just last week, with the founders of YouTube Chad Hurley and Steve Chen and Google co-founder Larry Page and CEO Eric Schmidt:

“The deal came together in a matter of days. After rebuffing a series of other overtures, YouTube’s founders decided to have lunch on Wednesday with Google’s co-founder, Larry Page, and its chief executive, Eric E. Schmidt. The idea of a deal had been broached a few days earlier. The setting was classic Silicon Valley start-up: a booth at Denny’s near YouTube’s headquarters in San Bruno, Calif. The Google executives threw out an offer of $1.6 billion and autonomy to continue running the business.

“That set off a marathon of meetings and conference calls over the next two days, which kicked into even higher gear on Friday, when news of the talks began to circulate, putting pressure on Google to sign a deal before a rival bid emerged. In fact, the News Corporation sent a letter to YouTube seeking to start talks but never received a response.”


This changes everything: Google buys YouTube for $1.65 billion

October 9, 2006

It’s official.  Google just bought YouTube.  I will have more commentary as more details come.

Ben Charny of Market Watch has more details here.


Path now clear for Google to buy YouTube?

October 9, 2006

News:  Reuters is reporting that the Board of Directors of both Google and YouTube are meeting to vote on the $1.65 billion deal in which Google will acquire YouTube.  If approved, the deal could be announced later today.  (More from Reuters)

Analysis:  The timing of YouTube’s announcement of major deals today with Universal Music, Sony Music, and CBS supports the conclusion that a deal with Google is imminent.  YouTube’s deals with 3 major content holders today have cleared away some of the copyright concerns, and made it less risky for the Google board to approve the acquisition of YouTube.