October 9th, 2006

Google Acquires YouTube, Becomes the Archetypal Media Company

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Google’s $1.65 billion acquisition of YouTube solidifies Google’s position at the center of media. Google already has Google Video, so they didn’t buy YouTube for the technology. No, they bought YouTube for the traffic, the same reason they cut the $900 million deal with Fox Interactive Media.

So don’t believe Eric Schmidt for a second — Google is now the archetypal media company — online video is just the next step in their quest to monetize the world’s content through advertising. The challenge for Google is that video ads are at the opposite end of the annoying/consumer-hating spectrum from text ads.

Google’s acquisition of YouTube is also the final step in the orphaning of content creation, which now exists completely separate from content distribution and monetization. You supply the content — Google will take care of the rest.

The content business just ain’t what it used to be.

UPDATE

Relfecting deeply on the Google/YouTube deal, Andy Kessler asks:

What is media anymore? Can you just slap videos up on the Web and become a younger and more vibrant Rupert Murdoch or Sumner Redstone?

I’ll add: Does media have anything to do with content anymore, or is it all about aggregating people’s attention by any means? Was media ever really about content?

  • Google bought the audience - they have the advertising pool and infrastructure to monetize YouTubes Web pages.

    Of course neither company went into business to become large media concerns but that is what they keenly decided they had become and are now leveraging their ability to deliver a tightly-focused audience to people who want to pay to be in front of them.

    We are in a disruptive time for established mass media. Call it the rise of the niche verticals but developing niche expertise will be critical.

    From the experience I have gathered building social media (and 20 years in print) I can say that not many news execs are savvy yet as to the many ways these new media story assets can be produced, packaged and monetized.

  • Media has never really been about content. Sure content plays a role and a major role at that, but as McLuhan pointed out the real punch of "media" is how the technology surrounding its delivery changes the way receive and share information (or content). At their essence media companies are technology companies.

  • You supply the content — Google will take care of the rest

    including make a boatload of money for themselves.

    I'm getting very tired of the "gift economy." It's getting to be an awful lot like "trickel-down economics."

  • . Yes, I think it’s over priced. Having the industry titans fight over you helps though.

    2. Very good for the Start up scene. This type of exit is more effective then any presentation.

    3. It’s not the last or highest.

    4. Google is probably the only player that doesn’t have to show ROI, Share price will go up no matter what.

    5. It’s a defining moment for the industry. Seriously. I’m glad Google bought YouTube, it’s a good fit. Let’s see what kind of advertising model they will spin out of it. The better and more profitable it is - the better off we all are.

    6. Check out what Mark Cuban has to day. Before AND after.

  • Mario

    Media is still all about content. YouTube has something for everyone! It's got stuff tons and tons of people want to see, like the Simpsons or South Park, things that pretty large groups want to see, like old shows from their childhood or videos of minor celebrities, surf and skate videoes, and it's got stuff that maybe 4 people on the whole planet want to watch. It's still content! But now it's about choice.

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