Robert Scoble of Scobleizer blog loves Google/YouTube deal

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.

YouTube + Google to remain separate, but share search

News:  Google VP of Product Management Salar Kamangar announced on Google’s blog more details about the acquisition of YouTube.  Although YouTube will remain a separate company, it will integrate some of Google’s search and Ad Sense features:

“YouTube, as we’ve stated previously, will remain an independent subsidiary of Google, and will continue to operate separately. Google will support YouTube by providing access to search and monetization platforms and, when/where YouTube launches internationally, to international resources. YouTube co-founders Chad Hurley and Steve Chen and the rest of the YouTube team will continue to innovate exciting new ways for people to “broadcast themselves.”

“Earlier this week, we announced one example of innovation in monetization and distribution with a new AdSense video test. We’ll be working with a wide set of content providers, grouping together high quality video content from providers with high quality ads and offering them as playlists which publishers can select from and display on their AdSense sites. (There’s more about the test on the AdSense blog.)”

Analysis: From a business standpoint, I like the corporate separation between YouTube and Google.  The separate identities will allow each to do what it does best.  I think it becomes harder to innovate when companies become bloated from acquisitions that are folded into one large company.

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

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

Siva Vaidhyanathan: What we might lose from YouTube to GooTube

News:  New York University Professor Siva Vaidhyanathan writes this probing article discussing what might be the fallout from Google’s acquisition of YouTube.  He writes:

“I suspect that we will look back on the heady days of anything-goes-user-generated content with much nostalgia. That does not mean that YouTube will change radically over night. Nor does it mean that YouTube will cease to be the major site of user-posted-and-created video clips. It just is unlikely to be quite as noisy and silly.

“It’s not that YouTube now must behave like a grown up company. It’s more that YouTube is becoming the central battlefield in the next great struggle to define the terms and norms of digital communication. So it’s retrenching in preparation for that battle.

“And every week that ‘GooTube’ grows in cultural and political importance, the more stories we hear of important video clips coming down.”

Analysis:  In the interest of full disclosure, I know Siva and always find his writing to be filled with nice insights.  The same holds true here.  For starters, Siva is quite careful in not exaggerating the extent to which YouTube has changed, post Google-deal — unlike a lot of other more sensationalistic articles out there.  Also, I agree that YouTube is a key battleground “in the next great struggle to define the terms and norms of digital communications.”  That’s 100% right, in my view.

I do disagree, though, with Siva’s suggestion that YouTube should not have removed a copyrighted news clip that discussed Rep. Heather Wilson and her possible coverup of the file of her husband in an alleged sexual abuse of a minor.  The copyrighted clip was posted without authorization of the news station that created it, and, after the news station complained, YouTube apparently removed it.  Siva argues that the use of the news clip was an open-and-shut case of fair use.  I wish the law of fair use were so clear, but, quite frankly, it’s not.  In fact, some case law points against a fair use, although in that case there was a clear commercial use of the video clip.  See L.A. News Service v. Reuters Television, 149 F.3d 987 (9th Cir. 1998).

But I do agree with most of Siva’s discussion of YouTube’s taking down of Michelle Malkin’s conservative video (before the Google deal, discussed here).  It’s good that YouTube allows users to “flag” “inappropriate” content, but, as Siva identifies, the system has its flaws:   “That means that a virtual community enforces community standards. However, YouTube has no mechanism to debate and work through what those standards should be.”  YouTube has said it’s trying to improve the clarity of the standards.

There’s a lot more that Siva says than I can do justice to.  So go read the article.  He says it better than I could when he concludes:  “So here is my great hope for the Google-YouTube deal: I hope that Google’s boldness and tolerance immediately changes the culture of YouTube. I hope that the YouTube editors grow more confident and less fearful about what they can contribute to the culture of the Web. Meanwhile, it’s up to us to pressure YouTube and Google to keep the Web crazy, fun, and even a little scary.”

YouTube is now a verb and an adjective

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?

At which Denny’s did YouTube-Google meet?–question finally answered

News:  I’ve received several commenters asking for more information about the Denny’s where the historic meeting between YouTube founders Chad Hurley and Steven Chen and Google founder Larry Page and CEO Eric Schmidt.  Based on a NYT article today, I’ve finally figured out it was the Denny’s on Broadway in Redwood City (map here). 

Analysis:  Somewhat ironically, I used to live down the street from this Denny’s!  And I can tell you that I’ve eaten there several times and never once saw any business-type ever in that restaurant.  The manager was not lying when he told NYT, “We generally get families here, lots of families, husbands and wives and their kids.”  But the location does make sense in at least one way, it’s sort of halfway between YouTube in San Bruno and Google in Redwood City, and conveniently located right off of 101.

Related posts

Google-YouTube deal struck at Denny’s

More about YouTube-Google deal at Denny’s

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

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.

More about the YouTube-Google deal at Denny’s

News:  It’s quite fitting for the unconventional, “outside the box” Google founder Larry Page to broach a billion dollar offer (in Google stock) at a local Denny’s.  Apparently, the group consisting of Page, Google CEO Eric Schmidt, and YouTube founders Steve Chen and Chad Hurley had orders of eggs and chicken strips.

Analysis:  I wonder who picked up the bill.

Related post:  Google-YouTube Deal struck at Denny’s

MySpace miffed by YouTube

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)

YouTube founders downright giddy

If you just got a deal worth $1.65 billion in Google stock, how would you feel.  A little giddy?  Well, here’s how Chad Hurley and Steve Chen felt yesterday:

Google and YouTube’s conference call about purchase

Earnings Cast has the audio with Google’s Eric Schmidt, Sergei Brin, and David Drummond, and YouTube’s Chad Hurley and Steve Chen.  Tech Crunch has a summary of the call here.

Also, the official press release is finally up.

Google-YouTube deal struck at Denny’s

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

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?

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.

Will Google buy YouTube?

News:  The Wall Street Journal reports that Google is in discusion with YouTube to buy out the young video company for $1.6 billion.  The WSJ attributes the source as a “person familiar with the matter,” but that the discussions are still “sensitive” and “could well break off.”

Analysis:  The thoughts of Google buying YouTube are downright dizzying.  With a war chest like Google’s, YouTube would be pretty much set for life.  Although some copyright holders might see this as bringing in an even “deeper pocket” with Google, the sword cuts both ways.  Google can hire the best copyright lawyers and finance any litigation all the way to the Supreme Court.  For example, with the copyright lawsuit over the Google Book Search, Google has shown no signs of backing down.