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November 14, 2006

Google/ YouTube Deal Closes as The Face of YouTube Evolves

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It’s over.

Today I announce my plans to say farewell to the gang at Bruce Clay, Inc. and lock myself in a cold, dark room in order to dream up the startup to end all startups. I will run my fledgling company for approximately 12-16 months, at which time I will hesitantly agree to sell it for tens of billions of dollars. After which, I will move to a far away island (no, not that one) with my two cats, where we will live happily ever after in geek billionaire bliss. Ahh.

[Traitor! I was going to give you a share in my startup but you’re just going to leave me out in the cold? Harsh! –Susan] – Hey! You wanted to trade me for SEOmoz’s Rebeeca. Talk about harsh! (That is in no way a diss of Rebecca’s proven awesomeness. It is a diss of Susan’s obvious lack of loyalty or existence of a soul.) Oh, and why is it /your/ startup?

Fine, perhaps not (since I can’t break free from these leg restraints Susan has me in), but that idea is starting to sound very appealing, isn’t it?

An email from the Google Press Center tells me that Google has officially closed its deal with YouTube, and suddenly the buying price seems to have swelled. Though the initial price was reported at $1.65 billion, according to the specs of the deal, it looks the deal is actually worth $1.775 billion – netting the founders $15 million a piece in cash, plus 3,217,560 shares of Google Class A Stock, and an additional 442,210 shares of restricted stocks and warrants. Yowsa.

Many are surprised with how quickly this deal seems to have closed, arguably illustrating that Google is not overly concerned about uprisings from angry content producers looking to file precedent-setting lawsuits. But should they be worried about an audience falling away?

There’s a short, yet interesting, Beet.TV video being passed around that shows Google Video exec Hunter Walk discussing plans for Google Video — plans that include placing ads on user-created videos in order to monetize all of Google’s video content. That signals a change of pace for Google Video, which up until now has made money through paid downloads of individual video segments.

It’s also not a far stretch to assume that whatever Google plans for Google Video will also reach out to YouTube. At the end of the day it sounds good for Google, but how will Average Joe video voyager feel about that? Do they want their content monetized and should they have a say? If this poster is at all accurate, many of them feel taken advantage of.

A New York Times Post article explains that many of YouTube’s most loyal posters are starting to feel "increasingly disenfranchised with each new major corporate alliance" YouTube enters into. Many have posted videos expressing their anger and frustration at being pushed out of the community by professionally produced content looking to make a buck.

YouTube user Paul Robinett sums up many users’ feelings, saying:

“It is starting to appear as though the regular guy doesn’t have a chance on YouTube anymore. The majority of the content on YouTube belongs to people like me, yet they seem to be cutting deals with everyone that owns content but us.”

And that seems to be the heart of it. YouTube’s once loyal community is now feeling betrayed – especially after hearing that Google was reportedly in talks with Verizon to put user-generated content on cell phones. The underground vibe once held by YouTube is slowly dwindling away as rough thirty second videos are being replaced with more polished video created by professional movie producers. All signs point to one thing: YouTube has sold out.

Yes, they have, for a whopping $1.775 billion, but that doesn’t mean YouTube’s fan base is getting any smaller, it’s not. It’s evolving.

While YouTube’s co-founders are sitting and counting the money, Google will have to learn to monetize the new YouTube content generators. I imagine this won’t be too much of a struggle since most of their new uploaders are wanna-be actors. All that’s left is make the deals with the TV studios. But what about YouTube’s audience, the ones watching, not uploading? Is there room for the group that made them famous in the first place or will they all disappear?

That has yet to be determined and it could be the wildcard in this whole saga. Without the audience, YouTube is just like all the other video upload sites out there. Unfortunately, I don’t think Google and YouTube are working them into their new plans, and even more dire, neither does their old audience.

Regardless, YouTube is now a Google-owned property and Google is about to set out on a full-scale attack to monetize its content and make friends with advertisers. The face of YouTube may have changed, but has the strength of its mass? Keep your eyes glued because it looks like we’re about to see the official rise of online video. Either that, or we’re about to see what happens when you trade a loyal fan base into a more money hungry one. Get the popcorn.

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