« Showtime Launching Significant Content on Amazon Unbox Main Urban Interactive's Ghosts of Liberty »

October 22, 2006

Steve Ballmer on Google Purchase of YouTube

I had let this slip by without making comment on it, but I thought Steve Ballmer's interview with BusinessWeek a couple of weeks ago while the deal was being finalized between YouTube and Google was fascinating.

WIth my writing yesterday about Web 2.0 and its value to convergence culture, I was thinking back to the Ballmer interview. For those who have not read it, the Microsoft CEO questions Google's spending $1.6 billion for what he sees an unproven commodity that just distributes someone else's content, without a strong business model. He equates this with Google's overall business model, in which it is taking control of content and advertising in a powerful way that he finds dangerous in the lack of strong competition from other search engines, etc.

However, he admitted that he would have considered buying YouTube if it is worth $1.6 million to Google and discusses the thought of paying a billion dollars for Facebook, which he questions whether it will retain its popularity in 15 years as the youthful founder gets older and separated from the college crowd.

"Is it worth a billion bucks? It hasn't proven to be worth a billion bucks. But it also hasn't refuted that it might be worth a billion bucks."

Victor Keegan with The Guardian says that the irony of the sell of YouTube for such a high price is that they only provide a platform and really do little else.

"Without those content creators, YouTube--and Flickr, and all the others--would be nothing. Imagine what would happen if ebay tried to value itself on the basis of all the inventory it held on behalf of its sellers. It wouldn't because it knows the inventory doesn't belong to it."

Keegan's ultimate question here in this commentary is how artists will rise to the top in this new plethora of online content, with peer assessment and greater ability to be discovered but many times more noise to compete with. But his comments do point out the important detail--that YouTube is the service, not the content, and that they really were "at the right place at the right time."

As John Naughton on Memex 1.1 points out in response to Keegan's story, Ballmer's interview draws into question where the value is with content distribution companies when the content providers are users. "Where's the value? The answer is that it's in the stuff that people upload. But if people don't like what you (the new corporate owner) start to do with the space then they can--and will--go elsewhere."

If you're interested in how Google is changing the climate of advertising and the responses of various other powers, including Ballmer, check out this great commentary by Robert Young with GigaOM.

Post a Comment
(If you haven't left a comment here before, you may need to be approved by the site owner before your comment will appear. Until then, it won't appear on the entry. Thanks for waiting.)

Add to Technorati Favorites