YouTube's Plans for a Google-Owned Future

eldavojohn writes "Reuters is reporting on Time Warner's approach to YouTube's copyright problems. There has been much speculation that Google will be sued immediately over copyrighted material on YouTube but this is a case of Time Warner actually approaching Google to work out a deal on this issue. It appears artists and labels will have the choice when digging into Google's pockets either through a business deal or lawsuit. Which will they pick?" Meanwhile, the AP is reporting on the possible development of a technology to automatically screen content as it is posted to YouTube, which may sidestep some of these issues and disappoint users.

Hot air buys more hot air

[Rosco P. Coltrane]

Quite frankly, I still fail to see how Google can have such a huge market cap. But I'll admit I'm not much of a business guy, perhaps their revenue streams from advertising, selling search services of various kinds and other services are enough to justify it, but still, Google is and has always looked like a huge Enron-type sort of operation.

But Youtube? these guys, I just have no idea how it can be worth anything at all. I have a feeling the Google emperor truly has no clothes at all...

I think it is interesting...

[rollonet]

The whole Google buying YouTube thing interests me quite a bit, especially the $1.9billon investment for a company which appears to be a giant liability. Also, next to Youtube, Google Video is the second biggest player in the online video delivery business. It seems there's no sense in spending over a billion for a product like this unless they feel threatened. Also, upon visiting YouTube (and I do quite a bit) I often do so to check out a video clip or a bootleg of a concert. I believe that now a company with a large amount of cash has purchased YouTube, it won't suprise me if the recording industries take a more hostile approach to YouTube - instead of the 'peaceful coexistance' style policy that's been adopted while YouTube did not have much money. In the end, a hostile, lawyer friendly approach to YouTube would be kinda sad, as many of the video clips and bootlegs I have heard/seen on YouTube have inspired me to purchase the music legitimately.

Is this a good or a bad thing?

[Turn-X Alphonse]

I can't decide if this is good or bad.. on the one hand this means youtube can still use all the crap it does already without the worry of legal threats... but on the other end of the scale does it also set up a president of "we licenced youtube to use the music, you can not access youtube for X dollars a month and watch the music of your choice" and hence making a two tier youtube system..

agreements with major music labels

[rs232]

"YouTube .. a company which appears to be a giant liability .. it won't suprise me if the recording industries take a more hostile approach to YouTube"

Just hours before Google announced a $1.6 billion acquisition of YouTube on Monday, both companies separately revealed agreements with major music labels [pcworld.com] for offering music videos on their respective sites.

was Re:I think it is interesting...

Foot in the door

[Rupy]

To be honest the purchase has baffeled me as well. $1,65bn just doesnt seem worth it - really. I have three (somewhat conjoined) theories: 1) An attempt to get their foot in the door with social networking, (to eventually tackle myspace?) and establish total "Internet Dominance" (tm) 2) Google has tossing money and throwing their weight around around to create buzz and increase stock... 3) Plans to take over the growing (legal) internet media distribution market. Perhaps partner with the likes of Paramount and co? RFC...

The real rason why Google bought YouTube...

[pr0digy25]

I am not a financial analyst or anything of that sort, but it has me wondering if Google bought YouTube for such a high value so as to justify their own market cap and keep it up there. Like real estate, the sale of adjacent home for a high value only serves to reinforce and increase the market value of a dormannt propety. Maybe Google sees another DotCom bust coming and is trying to change the tide.

Who Chooses...

[nick_davison]

It appears artists and labels will have the choice when digging into Google's pockets either through a business deal or lawsuit.

Generally, in business, it depends on who's doing the choosing.

Sadly, any CEO in a publically traded company knows they have to trade for the fast buck, not the long term one (despite their constant assurances to anyone listening that that's exactly the opposite of what they're doing).

Why? Because shareholders generally aren't in it for the long term. They want a buttload of money to come in today, that'll temporarily massively jack up the share price, and then let them get out (or at least reap the dividends). The way the system works, they don't (and arguably shouldn't) care about long term earnings anywhere near as much as the short term ones. As a result, the CEO knows he'll be replaced if he's ever foolish enough to choose long term profits over payouts for investors today.

It's for exactly this reason that the Google guys refused to sell a controlling interest in Google and awarded their own stock 10 times the voting rights of everyone else's - it allows them to make the right decisions for the company rather than the right decisions for the guys who want to take a profit and then move their money to take a profit from the next company.

Long term, successfully killing music videos on YouTube is a horrible idea. The people there today get rich from the infringement lawsuit, the next generation of artists get no ongoing royalties. A much better solution would be to take 20% of the money you could get from a lawsuit every year and keep getting it long past 5 years' time.

So, if artists vote, they'd take the long term rewards. If TimeWarner's CEO votes, he has no choice but to take the massive payout today or get replaced by his shareholders. If TimeWarner execs vote, they have to do the same or deal with a seriously pissed CEO. If the RIAA votes... Who knows. They're supposed to represent the artists, they really represent the companies and they're mostly interested in the souls of babies.

I don't dispute a long term royalty structure is vastly more profitable. But long term profits aren't necessarily what motivate modern business.