The Real Message of the Google/YouTube Buy: Power in the Media Relationship Just Shifted to Consumers
As news outlets continue jockeying to see whether Google's $1.6-million acquisition of YouTube makes any kind of financial sense, I'm struck by a different conclusion.
This business about media companies controlling the product they make after they make it has just taken one big step toward the dumpster.
First, there's the fact of the Google deal itself. Mini media mogul Mark Cuban's derisive comments to the contrary, this billion-dollar deal sends an important message: despite thousands of copyrighted videos uploaded to YouTube every day, the online company with the deepest pockets around is willing to bring this massive warehouse of unlicensed video into their corporate family.
That's likely because, unlike Napster, YouTube never tried to pretend that users uploading copyrighted content was cool. Instead, the site used a novel defense -- we cant keep up wth al the stuff they're uploading, and hey, doesn't it help promote your projects anyway? -- that pushed media outlets into seeing the marketing potential and cutting deals.
(If you want to really get bummed, check out this message from the two billionaire slackers enjoying their moment in the sun before their 30th birthdays; I was trying to figure out how to get out of living in New Jersey when I was 30...argh)
The site's content sharing deal with CBS announced Monday was a prime example. Under the terms of the deal, CBS provides some programming to YouTube -- like users aren't already uploading a lot of that stuff, anyway -- and gets on the ground floor of a revolutionary system. YouTube will identify when CBS-owed content is uploaded to the site and the network will have the choice of removing it, or keeping it up and sharing the ad revenue with YouTube.
So the Tiffany Network neatly avoids the trap Fox News fell in, when its interview with GOP boogeyman Bill Clinton became one of the site's most-watched videos. First, angry that an unauthorized site was making revenue off its video, it demanded YouTube remove the clips; then they realized what a tremendous publicity windfall the clips were bringing them and they relented (I don't care what anyone says about the MySpace-owning Fox-ites; their understanding of online stuff has always been three steps behind the rest of the media world).
CBS will funnel stuff to YouTube they want to promote: David Letterman's coolest bits, Katie Couric's news reports, its sports coverage, little-seen Showtime series such as Dexter and The L word and more. They also get a mechanism to enable the spread of viral videos which make them look cool and squelch the ones which reflect badly on CBS or corporate parent Viacom (what they will discover: stopping the questionable stuff is easier said than done, when you take a publicity hit with consumers every time you play media cop).
Similar deals with Sony BMG Music and Universal Music Group show the recording industry has also learned from its futile fight with Napster (do you really win if you kill off the hip pipeline that kids are using to access your product?).
But for YouTube users, yet another media company has allowed its product to be used in a way they don't fully control, hoping that the affection they get from YouTubers offsets the precedent they're setting by officially acknowledging that, yes, there are times when some knucklehead in Utah can upload a CBS clip to the world with no prior permission and it's cool.
Feel media's grip on its own work loosen just a little?
Of course, the question still remains whether YouTube is a giant dot com bubble waiting to burst -- competitor vMix sent out emails all day Monday noting that YouTube likely spends up to $3-million a month to maintain its video streams and likely faces a huge lawsuit liability for all the unauthorized video clips on its site.
But comScore Networks notes that YouTube offers 9 percent of all video streams -- or more than 30 million -- increasing Google's number of streams and its shot at advertising revenue on those streams by a factor of 9.
And unless Google is stupid enough to kill YouTube's traffic by forcing it to expunge all unauthorized video at once, the site's unique stance of tolerating copyrighted video unless the owner demands its removal will likely continue -- prodding media companies into giving up control of its product to hang with the cool kids on the snappiest video site around.