HJ-ED-DHJHerald Journal Columns

October 16, 2006, Herald Journal

Google buys number one video-sharing site

By MARK OLLIG

What a difference a week can make.

Just a couple weeks ago I was writing about the beautiful fall weather, the crisp red and orange colors of the leaves on the trees, the blue skies and mild temperatures.

This morning when I drove into work the sky was grey and overcast with cloud cover.

As I went past the bank sign, the temperature said it was 31 degrees.

There are getting to be more leaves on the ground than on the trees. “It is too soon for this kind of weather!” I said out loud in the car as I drove down 6th street toward my regular daily coffee stop.

What happened? Where did fall go?

It is early in the evening as I write this column--- the sky is still grey and the temperature is about 40 degrees, with a drizzle of rain that has a very good chance of turning into light snow tonight.

I reasoned with myself that being a seasoned Minnesotan, I knew from experience that the weather here can (and most likely will) change very quickly over the course of a week.

Meanwhile, the sun is shining brightly on the two co-founders of the most popular online video sharing website at: http://www.youtube.com.

Google has bought the two year old company for around $1.65 billion in stock.

The offer was reportedly made (and accepted) in a booth at a Denny’s restaurant near YouTubes headquarters in San Bruno California.

Google is an eight year old company, while YouTube has been around for just under two years.

The young men that founded YouTube Inc., Chad Hurley, 29 and Steve Chen, 28, will remain with the company after the buyout, along with their 67 employees which are located in San Bruno, California.

Eric Schmidt, Google’s Chief Executive Office is quoted as saying “This is the next step in the evolution of the Internet.”

YouTube will retain its name after Google acquires it.

One of the things that amazes me is that YouTube has yet to make any money. Granted they do have the most popular video-sharing site on the Internet, and Google did start their own video sharing site that I wrote about in a previous column at videogoogle.com which I found to be a good video-sharing site, but the real action is over at youtube.com and Google knows it.

There have been comparisons made with Napster, which was once a very popular online music site where you could download, music that was uploaded from other computer users for free. This resulted in some major copyright infringement lawsuits if you recall.

Many of the videos that are posted on YouTube are homemade, but this site also contains copyrighted material also, which many thought would end up with YouTube being sued into the stratosphere.

It was learned that Hurley and Chen had spent months cozying up with the major media executives in an effort to convince them that YouTube could make them more money by helping them hook up with the increasing number of people who spend a large amount of their free time on the Internet.

This resulted in YouTube acquiring new partnerships with Universal Music Group, CBS Corp. and Sony BMG Music Entertainment. Those alliances followed a similar arrangement YouTube announced last month with Warner Music Group Inc.

Since YouTube started in Hurley’s garage in February 2005, it has flourished into a type of online social community that shows more than 100 million video clips per day.

On YouTube, I have been collecting videos on Boxing, Music, History, and even old television show opening themes. Of course like any video “store” they have a backroom, where the other stuff is, so parents should be very watchful of what their kids are viewing at these sites. With all the positives there are also some potential negatives, so be aware.

YouTube’s video library is diverse, featuring everything from old television and cartoon clips, commercials, comedy shows, major news bulletins (I watched the 1963 video of when CBS interrupted “As The World Turns” to see Walter Cronkite announce that John F. Kennedy was shot in Dallas) to viewing someone’s home movie video clips. Most of these clips are submitted by online supporters who contribute to this ever growing online “video vault.” Public feedback and comments on the shared videos can be made on the website also. A person can save videos online at YouTube as “favorites” that can be shared with others. It can be a fun, historical, and educational experience if you look at it in a positive light.

YouTube’s worldwide audience was 72.1 million by August, up from 2.8 million a year earlier, according to ComScore Networks, which is located at http://www.comscore.com, and maintains massive proprietary databases that provide a continuous, real-time measurement of the numerous ways in which the Internet is used and the wide variety of activities that are occurring online.

Google has made a huge amount of money from the advertising revenue it generates from its search engine that many of us use.

Google wanted very much to become a major player in online video, and so they launched their version at: http://www.videogoogle.com which is a solid video resource, as I already mentioned, but when they realized that it could not overtake YouTube, they did what any large company does when they can’t beat the competition.

They simply bought out the competition.

Now Google will be able to generate higher profits from the new advertising revenues, as they will have control over the number one video sharing site on the Internet, in addition to already having the number one search engine on the Internet.

Google stock shares were trading up after the buyout was made public.

I learned that some other big players were also looking at purchasing YouTube, including Microsoft and Google’s competition, Yahoo, Inc.

This columnist believes that Yahoo will need to make a move to off-set the Google acquisition and the talk on the ‘Net is that Yahoo will make a move to acquire the second largest video-sharing and social-networking site at Facebook.com. I went to this website and their mission statement (more or less) says that they are a “… social utility that connects you with the people around you.”

Time will tell what Yahoo’s next move will be in this online chess game.

Google just captured a major piece in the game, no not the “Queen” but saying it captured one of Yahoo’s “Rooks” would be applicable in this columnist’s opinion.

Don’t count Yahoo out just yet, and know that Microsoft has its own game plan in the works, too.

“If you believe it’s the future of television, it’s clearly worth $1.6 billion,” said Steve Ballmer, Microsoft’s chief executive.

“This is the quick entry for Google into becoming Google TV,” said Allen Weiner, an analyst at Scottsdale, Arizona-based market research firm Gartne.

IPTV? Oh yes, Internet Protocol Television is becoming a reality.

The Internet Network has become big business.

It certainly has come a long way in a short period of time from the once much smaller and slower network that was dotted with home-made websites started by former system operators that ran online community bulletin boards.

This just in: The US Senate passed a bill which states that starting Feb. 19, 2009, there will no longer be “analog” television signals being sent over the airwaves. The FCC has mandated that the television signals will be broadcast as “digital” signals.

The 2009 deadline will not have an effect on the substantial majority of Americans who already subscribe to cable or satellite television, but households that rely on an antenna to receive “over-the-air” analog broadcasts will need to acquire a digital tuner to continue receiving TV broadcasts. Who will pay for this?

For more, stay tuned to this channel.