Category Archives: Youtube

Wal-Marting Across America or RVs parking their blog ethics at the door?

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I’m still confused about what seems like a significant overreaction in the blogosphere to Wal Mart’s PR agency Edelman’s decision to sponsor a couple in their RV trip across America. The blog, now called a “fake” by many but not the authors, is WalMartingAcrossAmerica

Onliners, especially bloggers, get more pissed about this type of thing than about, for example, thousands of far, far more significant issues of global significance and ethics, death and destruction and I find that upsetting, intellectually narrow minded, obsessive, and superficial.

So, a big PR firm sponsors a blog that they see will wind up being favorable to Wal Mart? This is surprising? Unethical? If they’d set up the whole thing I’d see it differently, but that does not appear to be the case. They simply were not transparent *enough*, failing to have the bloggers disclose their financial relationship to Wal Mart.

Sure, they deserved to be chastised and called out on this as a breech of transparency, but is this more of a breech than, say, downloading illegal music and videos? Or, for that matter, building entire companies around concepts of illegal downloading? Those guys get cheers and applause and hundred-million dollar paydays.

That said maybe I’m just not reading this right and it was some major ethical breech by Wal Mart/ Edelman.

Here’s my reply to Edelman’s (too thin) apology about all this even as it becomes the top online story by far:

With all due respect this apology seems too thin, and ironically itself sounds like part of the PR-driven rather than the “blog community” approach to the issue which would outline the scoop for everybody and explain how this got so out of hand.

It’s not even clear to me that you seriously defied WOMMA guidelines assuming that things are exactly as described over at the WalMarting Across America blog. Rather it looks like somebody at Edelman saw an excellent and legitimate opportunity and then chose to fund it in a way that turned this into a blog that was too sponsored to retain credibility.

Sheesh – I think I’m articulating your position at greater length than you are?!

Online Sheep get the revenue shaft. Hey Google, when you gonna show *Average Joe’s* the money rather than Rupert Murdoch?

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Business week is fretting over how Google will monetize the YouTube content and whether they’ll share with Myspace owners News Corp. Myspace users have embedded tons of YouTube video content in their personal pages so this is potentially a big stream of cash for somebody. Poor Rupert Murdoch doesn’t have enough money as it is, so heaven forbid that the content producers or the users would be put first in line for a piece of the action that *they generate*.

Business Week:
Google could soon have the ability to stream ads to MySpace users who are viewing YouTube videos embedded onto their MySpace pages. The question is whether News Corp. will get a slice of that revenue, and if so, how much …

I think a more relevant question is how much of that revenue should go to those generating the content and the billion daily page views.

Sites (like Google) are doing a fine job of making it possible for Average Joe’s to find the web pages of other Average Joe’s over at Myspace who in turn does a fine job helping people build silly pages filled with videos and images from other infrastructure sites like Flickr and Youtube. They should be well compensated for this and I think 25% is a good number, with 75% of the total revenue generated going to the “users” who are generating all that content and all those page views.

“Professional” users like me already get a piece of the action from Google – about 60-70% of the ad revenue I generate at my websites comes back to me via Google Adsense payments, and I think that’s probably a fine relationship. At least until Yahoo or MSN wake up to the fact they can jump start their contextual advertising services with a temporary 100% revenue share with publishers. Then I, and a large chunk of the 43% of Google’s Adsense Revenue, will be jumping ship. Booking services only give me about 50% of the commissions I generate but that’ll trend upwards over time (ha – it used to be only 20% revenue sharing).

However it’s very intriguing how the big players in the mega money deals leave out the key people in the equation – the Average Joe user. Part of that is simply scale. An average myspace user is only generating nickels and dimes (literally) per month in ad revenue. Collectively it’s a truckload of money but individually not much and Myspace does provide a good service to the user. Win Win? Maybe, but I think the trend will be towards people valuing their own content and their eyeball time more selfishly than they do right now.

The problem with all this great people-generated content — clearly the heart and soul of the new internet — is that the people generating it are getting left in the revenue dust. There are exceptions who manage to turn a few bucks here and there from the crumbs dropped by the mega monetizers like Google, but the average Joe who blogs and posts pictures and has a Myspace page with his Youtube videos gets nothing but the use of the online tools. That searchability and infrastructure is worth something. Arguably it’s worth a lot and clearly Average Joe is happy so far getting sh** for all his content effort.

However, I think over time Average Joe will become more demanding, perhaps even having the audacity to suggest that the collective fruits of all that online labor should be shared not just among Google and friends, but shared with those who watch it all and who make it all worth watching.

Time Warner to Google: We spell your merger “SueTube”. Battelle to TW: Lookout!

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John Battelle thinks Time Warner is mistaken to attack Google on copyright, writing over at Searchblog:

a shot across the bow may bring a broadside from the other side

I usually agree with John Battelle but I don’t really follow his logic here. I agree with him and Bob Dylan that “The Times They are a Changin”“, and that we need a new song to show how the old media empires don’t get the internet. I’d call that song “The Time Warner’s .. They Aren’t a Changin’ “.

However, I don’t see how bringing out the big legal beasts will hurt Time Warner. Frankly, I think they just want Google to throw money at them. As the Napster buyout proved all this has little to do with “rights”, it’s a money grab, sung as usual to the tune of that great O’Jay’s tune of years and years ago “The Love of Money” :
Money money money money ….. money!
The HUGE winners in this are the clever YouTube founders who really just created a very clever distribution system at an opportune time. The user community, and then the GoogleBucks, followed. One thing that irks me about all these mega deals – including Google itself – is that they are built on the backs of the swelling supply of (mostly) user generated content and in the case of YouTube a lot of illegally obtained copyrighted stuff. There will be little or no compensation to the *key components* of the YouTube environment other than a distribution vehicle. Now, one might argue that that exposure is enough compensation for an average YouTube uploader but it still seems…”wrong” to me.

I’d agree that those who create and then monetize these efforts should make a lot, but it’s unfortunate that people, like sheep, choose not to aggressively explore all our online alternatives. I think if we did do more exploring and innovative thinking we’d have a stronger ecosystem of companies rather than a few big players and a plethora of “also rans” standing around drooling at the prospect of a Google or Yahoo buyout.

$1,600,000,000 + 100,000,000 videos = lawsuit!

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Mark Cuban must be snickering “I told you” even though he’s already posted a note suggesting the initial lawsuits will be against small video players to set precedent for an attack on Google.

However Time Warner  is already threatening to sue over videos at YouTube. Presumably Google knew all this was coming and I’m guessing they think they can sweeten the advertising revenue pot enough to keep all the copyright hounds at bay. As the best monetizer of online content I think Google will be able to buy their way out of almost all the lawsuits simply by offering to either 1) remove the offending videos, which are currently making nothing or 2) monetize the content and give the copyright holder 70% of the revenues. In most cases Google’s 70% is going to be more than 100% of what the producer could get with their own efforts.

That said, many producers are going to see this as a great legal way to shoot for Google’s deep, deep pockets. They’ll have no interest in small payouts per download or ads or anything related to their own content, though they’ll disguise that in the complaints.

I’d be very interested to know how the Google team factored this cost into the YouTube equation.

Zenrob: Can Youtube win 11 Superbowls?

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I’m mangling his point a bit in that title, but Zenrob  has a great new post that does some math to ponder Robert Scoble’s question to me today:

“Tell me, is the $3 million for a minute of Superbowl ad time worth it? If so, why wouldn’t it be worth doing video advertising on YouTube?”

I said over there that I think it’s all about the math and the prospective math of these deals.  Robert’s great but I think he’s seeing this through his channel9/podtech video-enhanced glasses that make video seem more viable as a commercial medium than it really is.

To answer Zenrob’s excellent math question:
Else > 2*Youtubes > 10*11Superbowls

Facebook worth more than YouTube? Don says “yes”

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Don Dodge over at Microsoft has a great little thumbnail analysis of the business prospects of YouTube and Facebook, and concludes both are way overpriced at current valuations and Facebook is more valuable at 700 million. He cites Scoble’s latest thinking on the topic as well though it seems to me Robert seems too supportive of buying anything that even smells like Web 2.0 and is still feeling a bit hostile toward his ex employer.   I don’t blame him for that since he was way ahead on the new web and blogging and Microsoft’s failure to “get it” must have been really frustrating.

He’s not doing an extensive analysis but this is the best actual math I’ve seen regarding these deals, which as Don indicates with his little summary, appear to be valued more like Granny’s china than businesses. Given the uncertainties I think he’s generous to go 20x expected earnings. The landscape is changing daily and it’s not clear people will stick to favorite sites the way they stick to favorite brands (I predict we the people will not show much in the way of online brand loyalty, and this will shake it all up a lot in the coming years).

Ballmer on YouTube Google “transferring the wealth out of the hands of rights holders into Google”

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This is a great interview by Business Week of Microsoft’s CEO Steve Ballmer on Web 2.0 valuations and the competitive landscape up at the top of the heap, where Ballmer suggests only companies like MS, Google, Yahoo, and EBAY can even afford to think about doing the billion dollar deals. It’s a key point often lost on those who like to see valuations based more on financials and profits. Ballmer is noting that the competitive landscape can change these values.

But most interesting is this assertion:

The truth is what Google is doing now is transferring the wealth out of the hands of rights holders into Google. So media companies around the world are all threatened by Google. Why? Because basically Google is telling you how much of your ad revenue you get to keep.They better get some competition. Us. Yahoo!. Somebody better break through or you can short all media stocks right now. As long as there are two, you can hold onto media stocks. Google understands that. And that’s one reason why they’re willing to lose money up front.

Fascinating. He’s saying that Google’s trying to *monopolize* the media market. I certainly think there is some truth to this though we are way past the good old days where barriers to entry could let a big, rich, clever company – let’s say Microsoft – really do a good monopoly play on things everybody needed to use with computers. Part of the Google advantage he’s leaving out is that they really do intend to share most of the revenues with the producers and they have become so good at monetizing that, Google could argue reasonably, you’ll make more sharing revenues with Google than building your own advertising networks. My experiences comparing adsense returns to “roll your own ads” are fairly extensive and I can say that it’s very hard to beat adsense returns by creating your own advertising streams *even excluding the potentially huge cost of a sales staff*.

I think the main exception to Adsense as the best choice is what we see at super targeted niche sites like TechCrunch.com where they can charge about 10k monthly for a modest sized graphical advertisment.    Battelle’s Federated Media is hoping to bring this targeting advantage to a broader network of sites but I remain guarded in my optimism that Google’s highly automated and calibrated approaches won’t do a better job than humans do in most advertising spaces.

So, I think Ballmer’s right that competition will help publishers, but Yahoo and MSN sure better strap on the thinking caps and get their contextual advertising networks working much better than they currently work at providing revenue to all of us hard working internet small time publishing people out here.

Also, and this advice to MS and Yahoo is free and will knock Google out of the driver’s seat in a few months:  Launch your contextual ad networks with a 100% revenue share as an incentive for publishers to switch over.    At 43% of Google’s revenue Adsense is a huge factor at Google.

Got a few *billion* lying around? Buy an internet company!

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Here’s a nice list of internet purchases over the past few years. I’m starting to come to grips with the fact that even if you create a great company the payout is not that spectacular unless it’s the one in a hundred deal like a YouTube, Skype, Broadcast.com, etc. As one of the VC’s down at Mashup Camp pointed out those are the exceptional exceptions to the normal rule of deals worth millions, not billions. Even in those deals only a handful of people make more than a few million.

In a 20 million deal once you’ve paid off the VCs and generously dealt with other key employees I wonder what the average “founder payout” would be?   The average VC funded buyout is about 47 million.   This sounds high, but there are many, many VC fundings that end up dying.    Thus the ‘average value’ of a VC funded company would be way below the average buyout price if I read that number correctly.
As my old pal Rick likes to say “A million dollars isn’t what it used to be!”

NYT summarizes the Google Youtube deal

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Here’s a good summary of the Google YouTube deal from the New York Times.    They note that one analyst suggests this is not a spreadsheet valuation as much as a way to keep competitors away from all the juicy eyeballs at YouTube.

I still just don’t understand how any big player could not put the money to better use and grow their own.  I was under the impression that many used YouTube rather than Google Video because the latter took longer to post – presumably because they screened content more aggressively -I would have thought that Google Video would have tried the same configuration as YouTube before spending so much, but this also supports the idea that this was a way to keep MS and Yahoo (who is currently the video stream leader), from gaining the market share Youtube will now provide to the Google family of sites.

I don’t think this is a shark jump by Google, but I think this may go down as the most expensive “junk content” site aquisition in history.

Danny Sullivan says he does not have much to say about it over here at Search Engine Watch.  (Hey, I thought you left SEW Mr. King ‘o Search Optimization?!)

Mark Cuban to Google – you are crazy! JoeDuck to Google – just show me some money!

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Mark Cuban, no stranger to online video having made about a billion in that field, challenges Google’s sanity in the YouTube deal here.

It seems to me Cuban’s been the most insightful of those reviewing this deal and my first reaction is “brilliant stuff from an insider”, but I also respect how clever Google is and will continue to be at re-railing the online train.

Big producers will do big deals with Google as they are right now.   The growing community of small time content producers (e.g me) is a lot more willing to share and forget about copyright encumbrances *as long as you cut me in on the action*.

If Google can monetize my stuff better or close to as much as I can then more power to Google.   I’m rooting for Yahoo! winning the monetizing battle though because …. I like them better and have stock.   But there’s room for both, and I think we’ll see in the coming years that the rising tide of online ads will lift most of the ships.

I’m confident I’m speaking for 80%, and probably 98%, of the long tail when I say that the long tail, especially in video, is going to attach to the entity that can best monetize their work be it professional full length movies or stupid cat trick clips.

Can the other 2% of content people sue them?  Sure, but not painfully enough to stop the online video train o’ progress, a train that’s sure to bring us the most garish, irrelevant, superficial, and poorly produced video yet seen on earth and then find a way to turn a few bucks on showing it off to people.    God bless America!