YouTube Wars Enter Stage 3

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It’s official, we are definitely in the middle of a massive multi-industry war on the level of the RIAA/filesharing and other major technology wars of recent memory. Today, the war entered its third major stage, with many of the opposition joining forces to announce a YouTube competitor, coming this summer.

The chronology:

Pre-war ops: Various companies and startups enter the video sharing arena. YouTube (2/15/2005), Revver (11/2005), Break(1/2006), Blip (5/2005), Metacafe (7/2003) and many others form, hoping to gain the user base to eventually make money. Google Video (4/13/2005), MySpace Video (1/23/2006), MSN Soapbox (10/2006), and other major companies try to gain a foothold into the emerging market, and other small players get bought up by large companies trying to gain a share of the pie, including iFilm (acquired by MTV 10/15/2005) and Vimeo (acquired by IAC 8/2006).

Catalysts: December 17, 2005: Saturday Night Live presents Lazy Sunday. Spurred by the popularity of the video, which NBCU later demands be removed, YouTube gains many new users and media attention. YouTube has hit the mainstream, and has never looked back.

Stage I – The Alliance: November 13, 2006: Google annexes YouTube. Mere hours after both Google’s own Google Video and YouTube signed treaties with major music companies, Google trades $1.65 billion in stock for control of YouTube’s mindshare and army of loyal users.

Stage II – First Strike: February 2, 2007: Viacom demands Google remove over 100,000 videos, and March 13, 2007, Viacom sued Google for one billion dollars, striking at the popular YouTube, which is rapidly becoming a significant competitor for its audience. Viacom’s lawsuit, if successful, would open the door for similar lawsuits by every video copyright holder on Earth, burying YouTube and bankrupting the service. It is a battle YouTube cannot afford to lose.

Stage III – The Coalition: March 22, 2007 (today): NBC/Universal (NBC, General Electric) and News Corporation (FOX, MySpace), two of the largest forces in television, announce a competitor to YouTube. The service, a joint effort of the two, will launch this summer, will pool content from TV shows on NBC and FOX networks.

The joint service will give preferred access to those videos to Google’s main competitors, Microsoft’s MSN and Yahoo, as well as Time Warner’s AOL and News Corp.’s MySpace, shutting out Google from important content, and opening it up to more lawsuits if users upload NBC/FOX content to YouTube.

This mega-coalition, NBC/U-NewsCorp/FOX/MySpace-MSN-Yahoo-AOL, represents a huge threat to Google/YouTube. They have the media clout, advertising partners, web traffic, and money to beat back YouTube, which has not (and thus far cannot) developed the revenue streams for Google to use in this combat. While Microsoft and Yahoo have not found a way to beat Google at search, the keys to the internet, they can use YouTube to bleed Google dry, and thus making this a win-win for every single internet company that joins the fight.

The fact is, you may like Google, but Google is bad news for every large internet corporation. It is too large, too scary, too capable of being a threat in other companies backyards. Google has one hit, but in it holds the keys to creating future ones, by designing or buying companies and taking over verticals. It is in the best interest of every Microsoft/Yahoo/AOL/IAC/MySpace on the internet that Google just go away. Superpowers make competition difficult, while a splintered market is great for all to compete in.

Can Google win this one? Can Google outspend its rivals? Can Google someone not have to spend away all its cash on a defense? Was YouTube Google’s biggest mistake? We’ll see.

I can’t wait for Stage IV. My guess: YouTube wins a deal with the only remaining network, ABC. Google CEO Eric Schmidt uses his position on Apple’s board to leverage negotiations with Apple CEO Steve Jobs, a Disney board member, to put Disney/ABC content on YouTube. Possible future moves: An iTunes collaboration for Google, and a settlement with Viacom that saves Google from a dangerous legal precedent.



YouTube Wars Enter Stage 3
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