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Google, YouTube, MySpace, and Growing Old

Posted on: October 10th, 2006 by Craig Rairdin 15 Comments

The Google acquisition of YouTube has me reflecting on the seemingly never-ending stream of fads, fashions, and favorites that come and go like waves pounding against the shore. What strikes me as odd is that despite the fact that one wave follows the next with the predictability of time itself moving forward, there seems to be an endless supply of investors, pundits, and egomaniacal corporate executives who are sure that this wave is the one.

This week Google announced its intent to acquire YouTube for $1.65 billion dollars. I’m not going to explain what Google is nor what YouTube is. If you don’t know you’re kind of making my point so I’ll keep you ignorant and use you for an illustration later. Suffice to say that YouTube is an Internet pheonomenon that is burning up to $1.5 million per month serving up inane, homemade videos of teen angst, Johnny Knoxville wannabes, and illegal copies of anime episodes to legions of ADD-infected young people. And Google just paid $1.65 billion dollars for it.

YouTube is said to own 45% of the online video market. Let’s see, that leaves a little over $1.8 million per month for Yahoo and Microsoft to lose if they want to keep up with the market leader. Perhaps if this niche becomes ubersuccessful they could together jack it up to $5 million to $10 million in losses per month.

Am I the only one who finds this both disturbing and comical? Sure, they can sell ad space and maybe break even. But who wants to sit through commercials at the start of the next episode of LonelyGirl15? Part of the attraction of YouTube is its anarchy. Selling out to Philip Morris and Coca Cola is, well, selling out. Don’t they risk alienating the very audience that brought them their — ahem — “success”?

And here’s the kicker: Isn’t it pretty much a sign of the end when some big company buys your favorite hangout? Whether it was Pop’s Diner getting bought by McDonalds, the corner bookstore giving in to Barnes and Noble, or the neighborhood hardware store being run out of business by Home Depot, when the giant multinational megacorporation moves in, the fun moves out.

Sure, YouTube could eventually attract a new audience and start serving up episodes of Friends — complete with commercials — and replace television, but if you’re going to do that, why buy YouTube? Just create your own video site (Google already has one!) and cut deals with the TV studios.

And they are going to have to find a new audience. The current one will leave. They have to. Would you stay at a party after your mom showed up? I mean, is it still the same party when the grown-ups get there? Even if they show up with cigarettes and beer, who wants to get drunk with the old folks? All those stories about walking up-hill in the snow, both to and from school….

(By the way, I don’t get drunk with or without old folks. It’s just an illustration.)

Which brings me to MySpace. A year ago, most MySpace users were under 21. It was a fun hangout for young people. They could share pictures, videos and songs with friends, learn about new music, and participate in forums and blogs. Last month we learned that half of MySpace’s visitors are over 35. That’s like senior-citizen, one-foot-in-the-grave, elderly in MySpace years.

Heck, I have a MySpace site. It can’t be cool if a 46-year-old white guy with five kids and a mortgage has an account there.

If you know about it, it’s not cool any more. You know that, and I know that. Why don’t the people at Google know that? Fox News — the cable news Mecca of old, rich, conservative, Christians — plays videos it finds on YouTube. I have a YouTube account. My mom has a YouTube account. YouTube is dead. But hey, let’s drop $1.65 million on this dead horse and see if we can beat it back to life. Who knows. This could be the wave.

Why don’t these people just call me? Or send me an email? No, they have to go make these mistakes time after time after time. Time Warner buys AOL. Mattel buys The Learning Company. Google buys YouTube. What are these people thinking?

So I said I’d talk about growing old. I think that same phenomena that make it seem like you just took down the Christmas decorations and it’s time to get them out again applies to all these Web sites. Time moves so fast as you get older that everything is like a flash in the pan. How do you know what to get excited about? By the time you learn about something and get into it, it falls out of fashion.

I guess these kids at places like Google need to learn their business lessons the hard way like everyone else. It’s probably fun to have $1.65 billion dollars of other peoples’ money to lose while you learn your lessons, but how many people need to stick their hand into the fire to find out it burns? Seems like a couple of them could watch the others and figure it out.

15 Responses

  1. […] Original post by Craig Rairdin for Myspace News Google, YouTube, MySpace, and Growing Old […]

  2. call2biz says:

    This may take a certain risk, but the bigger risk, the greater the benefits .

  3. “Risk” is a measure of the probability of failure multiplied by the cost of the endeavor. It is unrelated to the potential benefits. I agree that they have put a lot at risk. The question is, are there benefits on the other side?

    There are two possibilities. One is that they have a plan to generate revenue from YouTube without damaging the experience for its users. I think this is unlikely, otherwise YouTube would be doing it. The second is that they plan to change the experience in order to make it profitable. This is what I argue would be fatal. They would alienate their core audience and in essence be starting over. And if you’re going to start over, why spend $1.65 billion to do it?

    If I was going to apply a pithy aphorism here, it would be more like “the bigger they are, the harder they fall”. We’ll see which of us turns out to be more correct.

  4. Demexii says:

    I disagree. Myspace was bought out a while ago and now they have a even larger user base then before, not smaller. So if people thought they were sell outs and didn’t like the flash ads they would have left already. The fact is that until something comes out that is so much better that people have a reason to get up and leave they will remain. Now Youtube may come into a problem with that since they are not making a ton of money. Google can help solve that a bit since they have the bandwidth and servers to handle the traffic much better than Youtube could.

    But even so, they still are going to be using a lot of money on it. But they are already moving towards a lot of revenue ideas without breaking the original idea. Paid channels, ads on the first page, and I am sure they will come out with other ideas that will keep the feel yet allow them to make money. Google seems to be good at getting ads in without destroying the overall feel of a site.

  5. My point about MySpace is that it’s passe. Over half its visitors are over 35. MySpace is over. Whether that’s Murdoch’s fault or just the natural course of events doesn’t matter.

    Extend this point to YouTube and the point is that there are several factors that indicate that YouTube is beginning its slide from edginess to mediocrity, as MySpace already has.

    Google may figure out how to make money with YouTube. I’m just saying by the time they figure it out nobody will care. Certainly not the people who are there now.

  6. Jeff Wheeler says:

    The October 21, 2006 issue of World Magazine includes a brief report on the purchase. Confirming Craig’s diagnosis: “YouTube users, meanwhile, worried that the deal would lead to unwelcome changes in the grassroots online community. ‘The Wild West feel of YouTube is already slipping away,’ YouTube poster Richard Stern told the Associated Press, ‘and within a few weeks it likely will be gone altogether.'”

  7. Trent Anderson says:

    If you can’t run the competition out of business you buy it….ruin it…make it disappear…etc…then nobody does it any better then you anymore….

  8. Yes, but then what? You make it sound like being the best (at any cost) is the goal. But the goal of running the competition out of business must be to increase your profits, especially if, like Google, you’re a public company. Now Google needs to make another $1.65 billion just to break even — and this in a market segment where to be #1 means you’re *losing* money slower (faster?) than your competitors.

    You may not have said it exactly the same way but you’ve pointed out exactly what I’m talking about: This transaction doesn’t make sense unless it’s just to boost the collective egos of the board of directors and CEO. If I’m a shareholder, that kind of “logic” doesn’t do it for me.

    Craig

  9. Andrew says:

    Hey guys,
    I have an iMac G5 running tiger 10.4.7 and I an having a wierd problem. Whenever I go to a site that has an embedded youtube, flash or some kind of video, there is no sound. If it a quicktime file there is no problem. There is not sound no matter what broswer I use, firefox, camino, safari, or shiira. And keep in mind that about a week ago I was not having this issue.

    Help Would be awesome
    Thanks!

  10. Hey Andrew,

    I think you’re on the right track. Your strategy of posting questions about your iMac problem as blog comments on articles and Web sites that have nothing to do with the iMac or Macromedia Flash is bound to get you the best results. Whatever you do, stay away from the Apple and Macromedia Web sites.

    Good luck.

    Craig

  11. Kaysha says:

    Alright i think myspace is fine and i hate it how frikkin schools block this crap its so stupid. there is nothing wrong with it all you do is just talk to your friends.. and it helps me get my work done!

  12. Maybe schools want kids to pay attention to their spelling and punctuation lessons instead of goofing off online. I don’t know; it’s just a thought. I could be wrong.

    Craig

  13. Mike Welch says:

    I’ll have to chime in here and side with you on this one Craig. Just think what kind of really new, really cool video server site we could weave with that kind of cash. The only thing is, it would take time, and catching the wave is what seems to move this business these days. Forget that there’s a whole ocean. Buy the wave!

    The trend you cite is typical. Whatever it was that lead a company to its heights, for whatever reason, tends to be mangled if not eliminated entirely after the new step dad comes along.

    I’ll cite an example: eBay. Back when the folks in the Camen Islands still owned ebay.com, it was a heck of a lot of fun. The rules were reasonable, albeit a bit loose perhaps, but they fostered a sort of self-rule, which is the kind of thing that has kept the newsgroups going for how many years? Now, there is no mistaking the fact that eBay is about the money above all. It’s not hard to conjure a rant about either ebay or their step-brother paypal site. Folks are getting tired of the nickel-and-dime operating principles, the ever-changing complicated legal agreements, the higher fees …

    Say, wanna go in halfsies and buy it?

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