TECH TALK: The Rise of YouTube: Googles Interest

So, why would Google want to buy YouTube? After all, there is Google Video. Hitwise has the stats: YouTube surpassed Google Video in early 2006, and that last month YouTube received a market share of visits 4 times greater than Google Video. Google’s replacement of the Froogle link with the Video on the homepage in August resulted in a 179% increase in visits to Google Video from July to September 2006, and only a 19% decrease in visits to Froogle over the same time period. Google obviously made the calculation that it had much more to gain from Google Video than Froogle. YouTube’s market share of visits increased by 24% in the same July-September period. According to Hitwise, YouTube had a share of 46% of visits to U.S. online-video sites in September. This compares with 21% for MySpace site and 11% for Google Video.

Charlene Li of Forrester Research summarises it perfectly: To start, 35 million users in the US and 100 million daily video views. But its not just the sheer numbers that grabs Googles attention. YouTube is a gem because it figured out what Google, Yahoo!, MSN, AOL, and all of the other video players in the marketplace couldnt that its not about the video. Its really about the community thats around the video.

The New York Times wrote about YouTube’s rise:

A deal for YouTube would be the crowning moment for a property that emerged as a cultural phenomenon almost immediately after it officially began last December. Its site, which delivers more than 100 million video clips a day, allows users to share a broad array of offerings from news clips to home movies to spoofs sometimes funny but often simply crude created by ordinary users.

Almost single-handedly, YouTube has both popularized the sharing of videos and empowered would-be movie makers around the world. The site is also facing possible legal challenges over the unauthorized posting and sharing of videos. Yet a number of media companies would prefer to embrace YouTube as a partner, rather than treat it as a pariah, as was the case with Napster.

The Wall Street Journal wrote:

“Combining Google’s huge advertiser base and proven key-word approach with YouTube’s huge inventory of tagged content and their engaged audience could be a very lucrative combination if they can pull it off,” says Mark Kingdon, chief executive of Organic Inc., a San Francisco online-ad agency owned by Omnicom Group Inc.

[YouTube] has been racing to build new systems for generating ad revenue. At the same time, it is negotiating with media and entertainment companies about online use of their content, some of which is available without the video owners’ permission on YouTube’s site.

Tomorrow: Googles Interest (continued)

TECH TALK The Rise of YouTube+T

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Rajesh Jain

An Entrepreneur based in Mumbai, India.