Google vs. : YouTube Fallout

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Google vs. : YouTube Fallout

Sure, the plans to acquire YouTube for $1.65 Billion in Google stock (sound familiar?) has sent ripples around the Internet, with some raving about the genius of Google to acquire this amazing video sharing company, and others blasting it as a trainwreck waiting to happen.

In my opinion, Google would not have entered into this agreement with YouTube without doing their homework, and for those who believe that YouTube is nothing but online videos in a sea of similar sites with the same offerings, it could be said that Google is the same.

But what differentiates Google from the pack is their relevancy, reputation, and successful monetization of search. Separating YouTube from the DailyMotion’s and Google Video’s of the world is community. Google needs community, YouTube needs monetization.

Google should have no problem selling contextual and video ad inventory on YouTube, and don’t be surprised if this Google Venture leads to a more diverse and robust YouTube, as Internet video makes its way into our televisions, cars, kitchens and cell phones.

The underlying controversy behind the Google YouTube deal however may be some saltiness behind the scenes at Fox Interactive and, which signed a rather lucrative $900 million advertising & search deal with Google this summer; and considers YouTube to be intense competition.

Over at Screenwerk, Greg Sterling unearths a piece from the Wall Street Journal which touches upon this future rift between Fox Interactive and Google.

Over the weekend, News Corp. executives expressed their displeasure with the deal to Google and threatened to remove any links to YouTube videos placed by users on their MySpace blog pages, according to a person close to the situation.

Google’s Mr. Schmidt and Advertising Sales Vice President Tim Armstrong are scheduled to meet this week in Los Angeles with News Corp. Chairman Rupert Murdoch, President Peter Chernin and Ross Levinsohn, head of its Fox Interactive Media online unit, to discuss the matter.

From personal experience I’d bet that almost half of the videos I view on MySpace profiles are embedded via YouTube, and in MySpace’s opinion, such services could be seen as parasitic, feeding off the popularity of MySpace…

“If you look at virtually any Web 2.0 application, whether its YouTube, whether it’s Flickr, whether it’s Photobucket or any of the next-generation Web applications, almost all of them are really driven off the back of MySpace.”

Here’s a question. If Google somehow integrates AdWords into YouTube videos, via Google Video Ads or a post view suggestive text link.. especially in embedded videos which are served on MySpace or other web sites, will the publishers who own those sites be reimbursed by Google?

Meaning, will Google have to pay MySpace for YouTube ads which are broadcast via embedded videos on pages?

Perhaps this is part of the big meeting this week between the two companies. If Video is the Future of Google, and MySpace’s Future is Video Entertainment… then I’m guessing we’re going to possibly see a lot more friction between these two companies in time to come.

Loren Baker
Loren Baker is the Founder of SEJ, an Advisor at Alpha Brand Media and runs Foundation Digital, a digital marketing strategy & development agency.
Loren Baker
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  • dave j

    To say that Youtube’s success rides on the back on Myspace is a bit myopic. In fact, youtube videos are one of the most popular and widely adopted features to grow out of the Myspace ecosystem and serve only assists Myspace in keeping market share. For Fox to cut off youtube ads would be cutting off their own nose to spite their face. If they want to lower Youtube’s exposure on their site, they should improve their own video widgets and content deals. The death knoll for any web 2.0 ecosystem is when they get a swelled head and decide to take control back from their users.

  • vRad

    I think its the other way round. MySpace is leaching off YouTube. That is, at least as long as Youtube does not embed any ads in the videos. If YouTube was indeed bad for myspace, why would they not develop an alternative video delivery system for their users?

    Currently, YouTube pays for the bandwidth of streaming the video, and all they get back is a little publicity. On the other hand, those Youtube videos add to the popularity of the MySpace webpage, and so help MySpace make more money through ads!

    When a partner of yours (Google of Fox) makes such a big deal, you are bound to tlk to them about it, and make sure that they are not gonna screw you over. YouTube and MySpace, I am sure will only complement each other, rather than directly compete.

  • Mobile360

    Google have to remember that if/when MySpace pulls the plug on the YouTube links, this is going to have a knock on effect on YouTube, Google could increase the amount that they are going to pay MySpace from $900 to well over a billion if they want MySpace to agree to keep YouTube link on their website. It will be interesting to see the outcome of this.

  • IrishLadd

    Very interesting, YouTube riding the GaySpace gravy train? I think not! Perhaps it’s the other way around.

    Myspace wouldn’t be anywhere near as popular or artactive with out YouTube videos. It’s all a mater of Fox Interactive’s stupidity. They want to be in command the way that Google is. They want a real say in what users do on the internet.

    While YouTube and Google are revolutionizing Fox Interactive is Devolutionizing. They say that MySpace is part of Web 2.0? They’re dead wrong. It’s the worst example of a Web App UI. I throw up a little every time I see someone using it.

    Get with the picture Fox, and stop being a bitch.

  • Adedeji Olowe

    Quite interesting. But I can bet that MySpace’s threat is a bluff because YouTube videos, which are liberally embedded all over MySpace, are one of the major drivers of traffic and “cool”.

    What Google has been looking for all this while is a community. Although it is one of the most visited website today, Google does not really have any deep community apart from Orkut in Brazil.

    Should MySpace throw out YouTube, it can definitely kiss a lot of the “eyes” away. Trust Google to come out with something better soon.

  • Dan

    If MySpace starts to make business decisions that impact what content users can and cannot display on their profile they will have serious problems with their reputation.

    Moreover, YouTube will most certainly not be forced to reimburse anyone for the viewing of embedded videos since YouTube’s API allows for the embedding of videos that still run off of YouTube’s servers. In other words, when you view a YouTube video on another site, you are still using YouTube’s bandwidth.

    I also find it absolutely hysterical that MySpace considers itself part of Web 2.0 (which was pointed out in comment #4). There is no agreed upon definition of Web 2.0, but I would imagine that it would be something like this: “Imagine the MySpace UI and design, Web 2.0 is exactly the opposite.”

  • Sean

    NewsCorp is saying that 60-70% of YouTube traffic is coming from MySpace (see TechCrunch . Considering that MySpace’s traffic jumped to its current levels before Lazy Sunday first appeared on YouTube (and YouTube started to gain prominence), I’m not sure you can make the case that YouTube is a major traffic driver for MySpace.

    That said, I don’t think MySpace would be doing anybody a service by eliminating embedded YouTube videos. One of the reasons MySpace succeeds is because users can customize their experience there.

  • ax0n

    First, I doubt NewsCorp has what it takes to build their own YouTube competitor to integrate into MySpace. They’re mad that YouTube videos, when clicked, actually take you to a site that’s off of MySpace. They thrive on advertisement impressions, and every minute one person stays there, looking at MySpace content, they get a few more pennies. Multiply that a few million times and it doesn’t take much to see why they don’t like YouTube.

    Secondly, Web 2.0 is mostly about user-generated content, collaboration, and community-driven sites. Despite what you might think, it has less to do with the UI and layout, and more to do with community. Wikipedia is definitely web 2.0, however it isn’t packed with typical design features that have become the Web 2.0 Stereotype.

    Sure, with Web 2.0 has come certain design trends, use of shiny gradient buttons, ajax goodness and bizarre color schemes. Both Flickr and Digg are good, clean examples of this design trend. These design trends do not make a site Web 2.0.

    Web 2.0 has also ushered in desktop-esque web-applications like gmail, meebo, and writely. This mostly has come from the power of CSS, Javascript, XML, DHTML and other newish frameworks. It was bound to happen regardless of Web 2.0.

    In the end, though, Web 2.0 is more about user-generated content, social networking and collaboration. This encompasses Blogs, wikis, and social networking sites alike. To that end, despite my absolute disgust with MySpace, it still qualifies as “Web 2.0”

  • Ryan

    So far only a handful of you even know what what Web 2.0 actually is and how it brings people together. MySpace and YouTube aren’t leeching off eachother, they are helping achother. The only “rift” here between Google and Fox is pricing and renegotiating terms of their previous deal, since this will seriously affect it. The management team at MySpace is top-notch and understand that Google, YouTube, and MySpace working together is an amazing win for consumers, as well as “shareholders”.

  • Eric Willis

    For everyone who says that Myspace should just build a competing product, etc. Please understand that Myspace Video ALREADY is the number streamer of video on the entire web. These numbers only include streams for myspace video and not other players inbedded into their network.