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« Barron's, Business Week and Across the Board | Main | Media 2.Uh-Oh Part 1: Pipe »

October 09, 2006



Media= Via + Yhoo... cashflow and content

Clyde Smith

"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?"

Interesting question, especially for a blogger.

I'm sympathetic to the angst expressed but, combined with "amateurish video (I get it, don't drink Diet Coke after eating Mentos)", which seems to be the currently most popular dismissive phrase regarding YouTube, you seem to have a pretty elitist take on the YouTube phenomenon.

It reminds me of a journalists' dismissal of blogging as a form of diary keeping.

Of course, in this blog's case, isn't your content creation primarily a form of marketing for your books?

Cause if you defend it as something more, a form of communication, self-expression, etc., then you're veering dangerously close to the motivations of many YouTubers.

This probably sounds like an attack but I'm just pointing out some things I think are worth considering in your post. I look forward to your upcoming "channels, layer cakes, slivers, political entrepreneurs, virtual pipes and other gimmicks."

That's a nice reminder that in a heterogeneous media/business environment, one might best employ heterogeneous means of investigation and analysis.

Michael Urlocker


Is YouTube worth $1.6 billion? No, because YouTube has no base of paying customers. For all the hype of Web 2.0 and other nonsense, there is no better indicator of a bad business than an absence of paying customers.

As Peter Drucker wrote in 1973: "There is only one valid definition of business purpose: to create a customer."

YouTube has a tremendous potential. We think it could become as important as CNN. And it may become an advertising venue. It offers viewers some things they can't get from mainstream media: Immediacy, drama, relevance, social commentary, universality.

But so far, this is all only potential, no more converted to reality than a four-year-old girl's potential to become a princess. The challenge ahead is for Google to convert a potentially disruptive form of media into a real business.

More on the disruption of mainstream media and the challenges ahead for Google and other mega-acquirors:

howard Lindzon

I think the exciting story ended. The deal is done. 1 plus 1 in tech rarely equals three so as I posted, Goog should be under distribution now after adding 4 billion the last few days.

Now it gets interesting and Cuban has a chance to be correct.

It is the long-term that matters

robb Montgomery - CEO

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.

Frank Ruscica

Going forward, making big money in media will be inseparable from establishing popular online markets.

Dave McClure

seriously, you're holding up Rupert Murdoch and Sumner Redstone as your examples of grownup media? aren't these the guys who brought us Fox & MTV? you sound rather stodgy in your criticism of Google buying YouTube.

why do it? simple. in a little over a year and a half, YouTube has become a top 10 web destination, with tens of millions of users, and is likely the fastest growing website / media property EVER.

beyond the eyeballs, Google has plenty of interest in owning video advertising, and with their existing investments in online ad tools (not to mention a substantial experience in litigation), it's a pretty good match.

YouTube brings tons of users, growth, and video under the Google umbrella. Google consolidates big market share in video, and adds its substantial proprietary advantages in advertising, infrastructure, and legal precedent.

not to mention, it shows maturity that Google is willing to pay for market dominance in a category where its own offering was getting beaten soundly. that's a new behavior for the GOOG, and a good sign of knowing when to "if you can't beat 'em, buy 'em".

for 1% of market cap, they get to own the growing online video market -- a market whose analog equivalent currently spends tens of billions of advertising dollars.

Media 2.uh-oh? not for Google. but perhaps for the existing Madison Ave advertisers, and Yahoo and Microsoft and others, yeah it could be an 'uh-oh'.. as in 'uh-oh', guess we should have tried harder to figure out what the hell we were doing with our acquisition strategy.

- dave mcclure

ps - full disclosure: i used to work with the YouTube founders at PayPal, where we [similarly] beat the crap out of other larger competitors and proved many doubters wrong who thought eBay overpaid for PayPal at $1.5B. in hindsight, it was a steal at 5x the price.

Yaser Anwar

With the Youtube acquisition, goog now controls over 50% of the video market, which seems the next array of growth. With Google behind it, Youtube has stronger bargaining power with media companies, hence they will be able to forge mutually beneficial relationships.


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


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