Something that has been nagging at me was “where are all those jobs that Google is promising for the new Ann Arbor AdWords home going to come from?” Yesterday’s purchase of the leading video sharing site YouTube for a reported $1.65 billion by Google goes a long way to answering that question.The two companies also announced a series of deals with content providers revealed before the Google-YouTube announcement designed to deal with copyright concerns.
The Mercury News reports that Google CEO Eric Schmidt addressed the copyright issue “I think most people believe that this is just the beginning of an Internet video revolution and there will be many ways in which that video gets uploaded, monetized and copyrights respected”.
Translation: Google will figure it out. What is more interesting to me (because I am Michigan-obsessive) is how this affects the AdWords operation. YouTube serves well over 100 million videos per day. Put a video ad on the beginning and/or end and there is suddenly a massive amount of new and different ad real estate available to Google. What’s more, it allows them to hone their ad chops for television in the relatively forgiving online environment.
CNN Money’s report says that the deal could further strengthen Google’s dominance in online advertising, giving it an edge over rivals such as Yahoo!, Microsoft’s MSN and News Corp, which owns the social networking site MySpace. The combined company will have over 60% of the online video market.
- Google/YouTube Press Release (Google) “Our community has played a vital role in changing the way that people consume media, creating a new clip culture. By joining forces with Google, we can benefit from its global reach and technology leadership to deliver a more comprehensive entertainment experience for our users and to create new opportunities for our partners” Chad Hurley, CEO and Co-Founder of YouTube (translation: we had a great idea, have a lot of money and the #1 internet company on board – we are on top of the world!)
- Mike Wendland’s take on the Merger (Detroit Free Press) Mike says that “the way Apple has leveraged distribution deals for music, TV and now movies, Google and YouTube will be able to do as well. In fact, think of them as competition now for the Apple iTunes music and video service.”
- Geek blogger & former Microsoftie Robert Scoble (Scobelizer) says the deal is most notable as it demonstrates Google is getting over its engineer-driven arrogance and that “it makes it very clear to advertisers that Google is in the video business big time. This has caught the attention of all the big media buyers at places like General Motors and Procter and Gamble.”
- Google Has Acquired YouTube (Michael Arrington/TechCrunch) Information about the bidding war between Google, Yahoo & others and a link to a recording of the conference call from Google/YouTube reps.
- First Blush on GooTube (John Battelle’s Searchblog) “Google Video was doing well, but YouTube was a clear winner in the social networking side of video”
- AdSense Video Ads (AdSense blog)
- The Utube Blog by OSU Professor Edward Lee provides excellent analysis of YouTube issues.
Image credit: GooTube by John Wilkerson
I guess something about YouTube isn’t complete until you have Chad & Steve, the founders of YouTube, talking about how they feel about the deal. (hint: they feel pretty happy)
Update, Oct 13, 2006
In The Old New Thing: Why YouTube is not (yet) the future of television, Robert X. Cringely writes:
CBS is going to throw on YouTube all its old pilots and episodes it had previously written off — content that costs it absolutely nothing because it was paid for long ago out of a different budget.
YouTube is the factory outlet of commercial television, at least for now.
In the flow of the story, this seems to imply that this is somehow bad for the Google/YouTube company. Personally, the concept of a platform whereby you can show people any old TV show they want to see (at any time) with ads that are customized precisely to the viewers preferences and/or recent search history as an absolutely staggering value proposition.