I thought most of what I had to say about Google's brilliant acquisition of YouTube had already been said, so I was going to pass on writing about it. Then I picked up today's New York Times to read Andrew Ross Sorkin's Page One "news coverage of the business transaction.
Now, a couple of disclaimers. I still read the New York Times in hardcopy. As I have written, it is my habit and I respect the publication immensely. I also read Sorkin all the time and usually find him to have one of the sharpest eyes in journalism. But in this case, I fear Sorkin and the Times have been blinded by the green light of envy.
First, this story is positioned as news--not analysis or editorial. Under the headline of "Dot-Com Boom Echoed in deal to buy YouTube," the article seems to me to be a snitty, unbalanced cheap shot at a smart deal. You can read it yourself and decide for yourself. If it had appeared on the op ed page I'd understand, but it simply is not news that's fit to print as the Times has promised for 150 or so years.
Now about that deal. It reminds me of one from the DotCom Era indeed. Back in 1998, when the founder of Yahoo, the then leader in search engines, was saying in speech after speech after speech, "search is worthless," a couple of Stanford kids started--you guessed it--Google. They were obviously clueless, because in an era when other companies were jamming their Home Pages with entire dictionaries of words and galleries of illustrations, there's had a meager 27 words. They had no ads and no visible means of support other than a venture investment that most people sneered at.
The Times and Sorkin, may not have noticed, but Google went on to do okay, usually by ignoring what experts had to say about them. The clueless kids had discovered that the smart thing to do was to get millions of people to visit your site and then send them away satisfied. You didn't have to be "tricky with sticky," you just had to have lots of people love you. When they started advertising, no one objected and the New York Times probably did not notice for a few years, that ad revenues that would have been theirs was now Google's.
YouTube has no revenue but it seems to have a few people who like what they do and keep coming back and telling others and growing at a rate that the New York Times will never ever experience. Maybe that's why Sorkin can take cheap shots in an alleged news story and his editors can support him with an equally snarky headline and Page One positioning--jealousy.
Was the price right? That's not my area of expertise, but $1 billion less than eBay paid for Skype makes it sound to me like a bargain. It seems to me that Google sees in YouTube exactly what it saw in itself. I think YouTube's value moving forward will be worth many times more.
