As you might have heard, Google went and acquired YouTube for a mere $1.65 billion. Time will tell if this was a brilliant business move or not. I believe Google’s acquisition is far more savvy than News Corps’ purchase of MySpace. MySpace is a mess and by the time anyone figures out how to make lots of money from the venture, the kids who give the site its buzz will be on to the next big thing.
But YouTube? There’s a different animal. Whether it’s $1.65 billion is debatable, but YouTube’s model — easily syndicated and shared content — gives the site a broader appeal. You don’t have to go to YouTube; it can come to you. Every time a little player is embedded in a website, YouTube’s brand is extended into the public consciousness. Google, being Google, will not be long in figuring out how to turn this into money. Simplest way is to leverage the sites who use AdSense and embed video.
Of course, the constant-yet-subtle branding of YouTube is a traffic-builder in itself. There is no reason why YouTube can’t feature paid content as well as free stuff. Google has already stated that Google Video is not going away. While not as popular as other video sharing sites, Google Video does provide a model for mixing cash transactions with free content.
YouTube brings a lot to the table, but Google brings search. In a recent conference call, Sergey Brin made it clear that building search results was a prime motivator in acquiring the company. Google is not abandoning its core business. It sees its acquisitions as enhancing the core search aspect of the business. As I’ve read reaction to this acquisition, I’ve noted quite a few comments that applaud the deal on the basis of search alone; apparently YouTube’s search engine is lacking in that area.
Google’s biggest challenge will be maintaining interest in YouTube. Right now, the site has the right kind of buzz, but we’ve all seen how quickly the next big thing can consume the last big thing. Keeping it fresh, keeping it easy-to-use, keeping it focused on easy access to content, those are the things Google needs to do next.