THE MOST COMPELLING pieces of information I have received this year have come in the form of viral videos sent by trusted friends for viewing. All of them required more than two minutes to view--not because they were that long but often because I wanted to view them again. Most of them came from YouTube, now property of Google. In one simple stock-only transaction, Google now sits on a market-tested viral mechanism. By topping and tailing content with advertisements, Google now has a pathway into sitting rooms, desktops and wireless laptops. I think such a marketing mechanism is undervalued at $1.6 billion. That's less than eBay paid for Skype. There is, of course, the waterfall of copyright infringement lawsuits that Google must endure but those kinds of claims simply mean permanent retainers for a cluster of law firms to defend Google's commercial interests. Legal protection is merely a line item of big business. I'd bet that Google set aside a half million dollars as part of this transaction to settle copyright claims out of court. There's no way the developers got paid a billion dollars for the transactiony.
The 21st century has energised the power of mass creativity. YouTube, like the Wikipedia and Craigslist before it, means we have evolved into a society that values participation as well as consumption. User-generated content like you find on YouTuve prove that people want to be players not just spectators.
Unfortunately, no one believes Google will enhance the social value of YouTube. Google tweaks things to lock them into silos. Don't expect interconnections from YouTube to enhance any ecosystem that feeds off social networks.
Google got YouTube because it offers another way to ram advertising to the masses. Google paid less than half the value gained by their stock price over the past week. The financial side of the transaction makes more sense than Ryanair buying Aer Lingus.
Shel Israel -- "Google, You Tube and the New York Times"
Andrew Sorkin -- "Dot-Com Boom Echoed in Deal to Buy YouTube"
Charles Leadbeater -- "We Think"
