Now that Google has bought YouTube, the issue is really what is going to happen. It is not enough to see a lot of traffic (YouTube has tens of millions of users rushing in to look at a myriad of online videos) to make a good business model (look at the 2000 Internet bubble that blew when people noticed that most companies only had traffic to offer but no income to rack).
So, is YouTube going to be a minor bubble in 2007? Maybe driving Google down, too? Some people may say so, but I am ready to bet on their success for a few reasons.
First, the business model is there and it works: YouTube is fast become a channel network. It’s not Fox, CNN, MSNBC, or similar TV channels. But it is reaching millions of individuals all over the world with multimedia content that is fast updated and following quickly the interests of its audience. It may even be able to anticipate most fashion waves.
Of course, YouTube is really stealing a lot of content from the existing channels (you shouldn’t try to count how many videos are plain copies of bits of TV news or TV entertainment shows, how many are music video clips or movie clips). This will probably find its limits soon enough. But YouTube is not depending on this. Most of the funny interesting things are coming from much smaller producers who really depend on it to distribute widely their videos (local rock bands, small film production houses, etc.) This large source of content has no reason to decrease and will keep feeding the frenzy to YouTube.
Additionally, Google is certainly the Internet company that best understood how to use advertisment on the web. They did it so right that they became the reference on this market (for example, if you click on one of the ads on this page, they receive money and I receive money). This means that traffic coming to YouTube can be converted into ads money by Google.
Of course, the channels will fight back. They cannot ignore the threat (it would quickly be deathly). But they can only try a limited number of counter-attacks:
- The TV channels try to reduce the offer of YouTube: They will drag the adversary in the courts protecting their copyrights. This will be long and protracted legal proceedings will only delay the impending consequences: TV channels need to be better than YouTube+Google.
- They can try and start a competition: A new competing network service. But this means that the TV networks must agree quick on a product (they are known to be rather slow-moving animals – I did not say “dinosaurs“). Furthermore, they need to have some incentive to make it better than YouTube (read “more attractive to the public“), and this will be a major challenge. I wouldn’t rule out the possibility of making a better YouTube than YouTube, but I’d bet that this will come from a small fast-moving startup rather than from a gigantic consortium of competing interests.
Of course, only time will tell. But the TV networks are quickly running out of time.