PressEthic

Google purchased YouTube, the popular video-sharing website, on Monday for $1.65 billion in stock. Google's hope is that YouTube will prove to be as lucrative an enterprise as it's viewership suggests. The risk, however, in investing in an as-of-yet "unproven" dot-com business is apparent, and reminds us of the dot-com boom of the 1990's, explained an article in the New York Times yesterday.

YouTube had been coveted by virtually every big media and technology company, as they seek to tap into a generation of consumers who are viewing 100 million short videos on the site every day. Google is expected to try to make money from YouTube by integrating the site with its search-based technology and search-based advertising program.

But the purchase price has also invited comparisons to the mind-boggling valuations that were once given to dozens of Silicon Valley companies a decade ago. Like YouTube, those companies were once the Next Big Thing; but some soon folded.

If anyone can afford to take such a risk, it is certainly Google, with an estimated market value of $132 million, the article states. Is YouTube a fad phenomenon, or does it have staying power? YouTube has certainly changed the way I look at the internet, and I use it often to search for clips of interest. But does it have the potential to revolutionize the way online users watch television and videos, further blurring the mediums through which consumers get information? It may not be so far-fetched, afterall, considering the New York Times' recent Emmy nod for an online video.

Speculation about the acquisition exists, however, mainly in relation to the risk of copyright infringement that inevitably follows internet sharing sites. The article goes on to say:

Of course, YouTube has also been compared to Napster, whose music-sharing service was eventually shuttered after a series of lawsuits. While YouTube has made some deals with content providers, including one yesterday with CBS, its users have uploaded millions of copyrighted clips, leading some to question whether Google is inheriting a legal minefield. YouTube has said it is different from the old Napster service because it removes content when a copyright holder complains.

However, YouTube has taken steps to strike up licensing deals with "two of the four major music conglomerates -- the Universal Music Group and Sony BMG Music Entertainment -- and the CBS television network in exchange for a percentage of YouTube's advertising revenue."

The article goes on to explain that Google will be successful in this enterprise if they embed advertising into the video clips that are viewed by millions daily, and asserted, "The deals reflect how media companies are rethinking the distribution of their entertainment content online." This transaction serves to further diminish the once-prominent distinction between the different media vehicles. Between the demise of print and the integration of internet and video media, advertising is changing, marketing and pubic relations are changing, and, most notable for us, journalism is changing.

Now we'll just have to wait and see if this acquisition proves as successful as Google hopes. My guess is they're "Feeling Lucky."