YouTube flips
Google's acquisition of online video site YouTube.com for $1.65 billion in stock is the talk of the day. It's the old story of two-guys-in-a-garage make it big and sell out. What Google plans to do is "monetize" what has up to now been a feel-good all-for-free site. Presumably it will do that with advertising of some kind.
YouTube's meteoric rise is hard to chart. A year ago, it hardly existed didn't exist, the next it was everywhere, goring from 5 million to 30 unique million viewers a day since January. It has grown with constant links from blogs where the YouTube logo and start button appears more and more frequently. Google's own attempt to set up a video repository has been successful by any measure but YouTube's, but slower to catch on, so it will roll its own effort into YouTube.
YouTube, simple as it is, may be one of those disruptive innovations that change an industry. The consumption of video in small doses at the computer is a growing trend (barley on the radar a year ago), and the order of things has rapidly changed from YouTube scavenging for video to an increasing amount of video being produced just for YouTube, including music videos and movie promotions. This is short-attention span approach that may well be a challenge to broadcast and cable video.
What is mind-blowing is that the company was started in 2005, around a year and a half ago. Microsoft has been working on Vista, its new operating system, for longer and it's still not on the market. The company has started to resolve its biggest problem, copyright issues, with companies like NBC. And Google has agreements with Sony and Time Warner, so it will solve some of the other issues. Very upset now is News Corp., which owns social networking site MySpace, and which only recently signed an ad deal fro that site with Google. News Corp. sees YouTube as a serious rival, since MySpace had been growing its own video site, currently #2. The combined #1 YouTube and #3 Google Video will well over twice the size of MySpace Video. Other rivals, MSN video from Microsoft and Yahoo Video are far behind.
For Google it's a costly move and there are the usual mutterings. But the opportunities to dominate, crushingly, one of the hottest sectors of Internet and find a way to make money form it were obviously irresistible. Google already has been the fruit of a breakthrough idea from two young programmers. It's smart to look outside for the next big innovation, and they seem to have it.
7:48:40 PM 
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