GooTube: Thoughts on Google Buying YouTube

On October 6, 2006, rumblings arose that Internet giant Google was in talks to purchase YouTube, the popular online video-sharing site, for as much as $1.6 billion. Spokespeople were quick to deny the incident with the same air of terse dismissal accompanying celebrity dating rumors. So, of course, it went through. As significant a merger as Rupert Murdoch acquiring MySpace, or the great AOL Time Warner connection - what are the implications?

The first is an end to the speculation about how YouTube would make money. One can hardly read an article about YouTube without a mention of its lack of a business plan or significant revenue stream, but as its stock price alone has shown, Google has no problem bringing financial prosperity to the wild and woolly world of the Internet. The largely commerce-free YouTube might find itself integrated with the popular Google AdSense program, a proven moneymaker for Web sites large and small across the Net.

Although Google has its own video sharing service, Google Video, it receives but a third of YouTube's traffic, and has not been able to compete in the areas of community-building or sheer recognition; YouTube, like Xerox for photocopying or even Google itself for searching, is not just a brand name but a byword. We might expect Google to want to retain, and even integrate, YouTube's popular channels, groups and all-too-Web-2.0 tagging system as-is. Indeed, Google has said this is the case.

Is all this a tacit admission of defeat from Google that Google Video was #2 in a #1 world? Much would depend on how much YouTube would be modified under its new ownership-in an attempt to "Googlize" it. But Google wants to leave the untamed YouTube alone-the state of nature, as it were-and just take in the revenue. YouTube's robust if messy interface is in stark contrast to the clean, more professional layout of Google Video (even if the latter is still hosting largely amateur footage). But it's a beloved mess. Why tamper with success?

Clearly someone thinks this is a good idea, as Google stock rose on the day the rumors broke. With the great user-generated-content trend on the Web still picking up steam, the future is unclear for all parties on both the aesthetic and business ends.