The Future of Google's Youtube

In what Google Chief Executive Officer, Eric Schmidt, called "the next step in the evolution of the internet," Google has committed to buy online video clip site, Youtube.com, for $1.65 billion.

Youtube has yet to make a profit, but Google is looking to the future and hoping that the video sharing website will provide a platform for the future of entertainment and advertising. Google is betting that Youtube's website, which is the forerunner, the
brand name, in what some are calling a burgeoning online clip culture. Google's own Google Movies

Entertainment is shifting from traditional television and big-screen content to shared and often pirated online material.
Young people are seeking different types of entertainment and increasingly watching homemade or other highly specific content. Youtube is a force to be reckoned with because, even though it has no proven revenue stream and has
yet to turn a profit, its movie clips are downloaded 100 million times a day. You do the math. That kind of access and
exposure definitely creates ample opportunity for Google to influence many pairs of eyes.

Google, Inc. will pay $1.65 billion for the one-year-old small internet company whose creators are the ripe age of 27. The 62 employees of the company will all keep their jobs and the headquarters will remain in San Bruno, California.

From the outset, Google faces a large obstacle in the fact that many of the videos on Youtube's website may be liable for copyright infringement due to the use of songs dubbed over clips and actual clips from copyrighted films and shows.

With the purchase of Youtube, does Google set itself up as the largest copyright infringement target in the world? Or will Google's size and power hedge that threat?

The billion dollar pricetag that Google paid may look like an exuberant 90's "dot-com" type of transaction because Youtube has not proven to make a profit. But it is not like those transactions at all. We can trust that Google, with its proven internet advertising expertise, in concert with Youtube's 100 million daily page views, will find a way to turn a profit. And it won't just be through advertising. The wealth of information Google can cull from Youtube's users, ie. their viewing habits, the most popular content, will make them, in addition to cash rich, incredibly information rich-even more than they already are. Tying in entertainment to their overall strategy is the next frontier for internet powerhouse Google. When Eric Schmidt says it is "the next step in the evolution of the internet," he means that it is the next step in the evolution of Google. The two are almost inseparable. Google is increasingly becoming the internet, or at least many people's conduit to the intenet. There's Google and there's everyone else.

Much of the $1.65 billion pricetag is attributable to Google's having to outbid competitors such as Viacom and Microsoft for the young but incredibly popular internet site. Much of the price is also attributable to the Youtube brand name, which added a significant premium. The purchase of Youtube is basically what happens in business: people find something fun and interesting to do, it takes off and becomes a phenomenon, then a large corporation sees an opportunity to make money from the venture and co-opts the original idea for profit. Not to cast this sale and purchase in a negative light, but I guess the question is, what exactly is Google planning to do with Youtube?

And how does Google plan to "monetize" the content on Youtube? As blogger Scott Karp (in a July 31 article) writes on Publishing 2.0, "There's no real premium on lip synching, stupid human tricks, and soft core porn videos, and advertisers will eschew this kind of content in video." There are obstacles to overcome such as copyright infringement, explicit, and often strange material, but the sheer amount of hits the site gets is a provocative selling point.

What does this sale mean for the people who use Youtube to post their own clips to share with friends, family, and the rest of the world? WIll the site stay pretty much the same, except with more pointed advertising campaigns. Or will it change in some fundamental way. Or, maybe this "clip culture" will pass us by as fads often do.

The people at Google are pretty smart and pride themselves on their brainy, numbers-oriented culture. They have ideas. Probably big ideas. With the purchase of Youtube, Google gains even more access to intenet users and viewing information. It will be interesting to see what happens.