Google is an agent for the buyer of information. In a world of unlimited information, this is where the value is. (T-shirt available here.)
TV networks and movie studios are, when they distribute video, agents of the seller. In fact, they usually are the seller. (Movie studios increasingly distribute films for others.)
So who do you think will win the new battle between Google and the networks, which was redoubled today with the NBC-Fox announcement?
It should be YouTube.
The NBC-Fox announcement is predicated on the idea that their video is unique, must-have stuff that can’t be replicated. It is also predicated on the relationships the networks who produce the video have with advertisers, who will be called upon to support the video.
So here is how it goes down.
YouTube needs to gear-up its own advertising program. It needs to
generate what amounts to a decent Cost Per Thousand (CPM) for all the videos it offers,
and pay a hefty portion to the people who create the video. Google is already selling ads on this basis. Google then needs to publicize the rates it’s getting (TV networks keep this information very private).
Once this is done you can start making apples-to-apples comparisons.
The networks are going to have very high costs. They have to build
server farms, and they have to buy bandwidth. They may also be paying
for file conversions. They have to hire staffs for all this.
The networks will know these costs, and once they get the Google
figures they will know how their own efforts stack up. My guess is they
will quickly find it makes sense to deal with Google.
Let the market decide, and I feel very confident in the outcome. Let
the media or corporate egos decide and it will just take longer.
In the end, the dollars always win out.
