I read an incredibly stupid post this morning about how Google would have to shut down YouTube because it wasn’t making money.
It would seem that a lot of companies should have been doomed for not making money, including the American automotive companies, but that’s not how finance works when you are the 800lb gorilla in your field.
A lot has to do with trust and confidence in a corporations ability to convince people that it has intrinsic value. Newspapers have been getting away with this for years, even though their business model died when CraigsList went global.
Didn’t people say Google would never be able to successfully monetize search?
YouTube is now the second leading search site. People now want to watch video to answer questions as well as reading text.
If you’ve seen the new audio transcription tools in Adobe Premier, you know it’s not long until video is easily searchable as well. That will change the value of YouTube considerably as the largest depository of video online.
Getting back to value, most people don’t realize that all those annoying ads they can’t stand have value to them- because they were used to subsidize the content they’ve been enjoying for “free” for all these years.
The mass media have been asleep at the wheel, believing that as long as they have great content, they’ll have big audiences and can continue to count on advertisers accepting that some of their message will be skipped or delivered blindly.
Those days are over.
No advertiser will be willing to accept less than 100% targeted delivery in the near future, and this is where Google will deliver the ultimate power play of modern business history.
Google was never in the business to monetize content: it’s in the business to monetize you- the viewer. By building a trusted relationship, based on providing a superior service (search) they have earned the right to become your middleman in serving you premium content in exchange for showing you personalized relevant ads.
They know you from your search history. They know you from your browsing habits. They know you from your gmail account, your Google voice account, pretty soon, you realize you have a benevolent big brother who knows you better than you do. Google has been called the database of future intentions- and by comparing you to others like you, they can make some pretty good guesses of what you’ll like and won’t like- much like Netflix and Amazon do with their suggestion engines.
You watch ads relevant to you, they serve you the content you want, advertisers reach exactly who they want, Google gets a better understanding of you with each ad and your response (did I mention you’ll have to respond to every ad with a brief thumbs-up, thumbs-down or answer a few questions?)
As the mass media model fails- Google will be in the unique position to be your agent in brokering ads to pay for your content.
That’s their business model, providing value to you and to the advertiser, and YouTube is one of the keys.