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Google-Youtube -- what's really going on

Google-YouTube like to spin that the billion-dollar copyright law suit from Viacom and the new online venture by NBC-Newscorp is just about "negotiating."

  • Don't believe it.
  • This is not simply a negotiation over "price;" it's all about video competition and the viability of video business models going forward. 
  • Google-YouTube are the video networks biggest competitive long term threat, not their natural "business partner."

What's really going on is Google-YouTube is trying to disintermediate all video content and network companies.

  • Google believes it has a more efficient monetization mechanism for advertising than any of the current or traditional models.
    • So Google is making a play to effectively insert itself in between content players and their existing customers so that Google controls the monetization of the customer relationship -- not the content company.
    • In other words, Google believes its Youtube "distribution network" as Google CEO Schmidt calls it, is superior to the content networks of NBC, CBS, Viacom, ABC-Disney, Fox-NewsCorp among others.
  • What this really is about -- is competition, not negotiation.
    •  Google wants to steal the video content players audience from them and in the online space they have largely succeeded to date.
    • According to Nielsen/NetRatings for February, YouTube had 42m audience, Google Video had 21m audience and the next three largest, AOL video, MySpace video, and MSN video, each only  have 12-13m audience a piece.

Make no mistake. Google already has built the largest "audience" of any "network" in the world -- ever.

  • With roughly 50% share of the search market of a billion Internet users worldwide -- that's a half a billion person worldwide "audience" to leverage into video! 

Bottom line: This is competition and war, not negotiation.

  • So don't expect Google-YouTube's video competitors to give up their long term franchise and take a short term pay off from Google to allow Google to supplant their business model and take control of the monetization of their customer relationships. 
  • The video content players would be nuts to fold their tents and cede the Internet video market to Google-YouTube. 

 

 

 

  

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