turn a profit, is about to be sold for a ten-figure sum. But in fact, Google, the buyer, is onto
something big. Video is the next frontier, and YouTube plays 100 million videos a day to eager
viewers around the globe.
To back up a bit, I was astounded when New Corp. paid $650 million for MySpace, the social
networking site, figuring that the media giant would never get its money out of the deal, but within
a few months, News had monetized that property at roughly twice what it paid. So, get ready; the
new world is here.
Why is YouTube worth so much? Well, the simple eyeball math alone should explain it, but it's
more than that. YouTube and other similar sites (Digg and Google's own video site) are
changing the very foundation of our society, the way we live. Take for example, Clinton on Fox.
Bill Clinton did a great job smashing back at his conservative critics on Fox's Daily Show, but,
except for a few print follow-ups the next day, it would have died there. Instead, the clip was
picked up on YouTube and got hundreds of thousands of new plays and thousands of
comments. Anyone who missed the original airing but had heard about it could see for
themselves. Video that you can watch when and where you choose is changing the game.
Another example: the Dell battery blowup in an Osaka hotel. A Japanese businessman with a
cell phone videocam just happened to be alert enough when the fire started during a conference.
You see the participants step warily away from the thing as it catches fire. At one moment, the
flames fill the entire screen. In the past, this incident would have caused a news story or two
perhaps, the return of the unit, a free fresh one sent out by Dell to the injured party, maybe some
additional compensation, and that would have been the end of it. But when the video, which ran
on the Inquirer's web site, started playing over and over again all around the world, it set off a
spate of news stories throughout the mediasphere and touched off the largest battery recall in
the history of electronics.
There are other examples of politicians who have brought themselves down through slips caught
on video and unknowns who have become internationally famous through YouTube and other
video sites. "Bus Uncle" is a famous example of a Hong Kong nobody who was catapulted to
transient stardom when he lost his temper and berated a fellow passenger for touching him on
the shoulder while he talked on a cell phone during a bus ride. Someone across the aisle
caught it on his cell cam and created a sensation overnight.
Late today, the deal closed at $1.65 billion, and even before it was inked the two companies
announced a slew of accompanying content deals, already worth hundreds of millions.
Video is will continue to rise in importance, as will social networking and other Internet
phenomena. Most of us barely understand these things, but the big Internet and media
companies, Google, News, and their ilk are onto something. So, don't be surprised at the huge
multiple paid for these companies. When the dust clears from this latest land grab, people will
begin to see how these hot Internet properties are going to yield value for at least the next
decade. The numbers may boggle the mind, but the big players have a vision of how all this will
play out, and the society at large is just waking up to it.
© 2006 Endpoint Technologies Associates, Inc. All rights reserved.
