Paradigm shift: What Google didn’t buy

I started the day reading about how TechCrunch’s Mike Arrington felt attacked by the journalists at the Online News Association conference, and ended it hearing that Google had indeed bought YouTube for $1.65 billion in do no evil stock.
That news got me thinking about what Google mighta coulda bought with their money and didn’t, and I got to asking myself where the paradigm shift was in that.
For instance, with that kind of dough, Google could have bought the New York Times Company. I remember talking with Timesman Martin Nisenholtz about how the NYTimes was one of the biggest consumers/placements for Google AdWords, right behind the big portals as they were still called then, Yahoo and AOL (this must have been late 2004.) Nisenholz felt that the Times had to find a way to roll up in size, and not soon after, they bought About.com.
Presumably, if Google was looking for a property that they could own to place their own AdWords on, they could have considered buying The New York Times. But no–they didn’t, did they–and the decision to spend all this money on YouTube shows that the coffin nails of mainstream media are already strewn across the open grave (Yes, I am feeling poetic tonight, that kind of day).
The amazing miracle of YouTube versus The Times, as everyone reading this blog surely already knows, is that YouTube is a platform where cream–user-uploaded videos–rises the the top, to be savored by the world, while The New York Times Company is an information organization that pays thousands of journalists, designers, business people and administrative types millions of dollars to create expert content that tells people what to think and what to like. And honey, that day is passing fast.

Even though YouTube has copyright issues to work out, and no established revenue model (yet), it’s the kind of social media platform that is quickly–for better or worse–claiming the attention of people who once turned to newspapers, cable TV and online news–just a few years ago–but who are now making user-generated content–and fan-uploaded music videos—a focus of their time.
Further, after a year in operation, YouTube reportedly has 50MM users worldwide, while after 100+ years in operation, the NYTimes has what, 20MM(12 MM registered, plus another 8…)
In terms of traffic and popularity, YouTube had 12.699 million visitors in May 2006, according to a recent MediaMetrix press release. Seeking Alpha reports that the NYTimes had 29 million visitors a month in March 2006 and ranked No. 56 in web traffic. (The revenue for the entire company in that period was $832 million.)
Do you wonder which business had better margins? Anyone want to guess the Times? (Thought not.)
The point here–just to kick it a little harder–is that this is yet more evidence how social media platforms that are shifting the paradigms in a profound way–Not only does YouTube have a mass market, it’s video on the web appeal that the more high-brow Times will never have (Is YouTube the next MTV?). Furthermore, it’s a platform that gives Google the opportunity to morph into a multimedia MySpace ecosystem, way beyond what Orkut could ever be–and most cruelly, it’s something that teens and twenty-somethings care about, which may no longer be the case for The New York Times.
So Google bought YouTube, not a media company, and the fact that doesn’t even surprise anyone one anymore and that it makes perfect sense, that, dudes, is a paradigm shift.

Latest Comments

  1. Richard says:

    I don’t think the Sulzbergers would ever consider selling the Times, do you?
    I guess their day is passing fast, but if you look at their current series, “In God’s Name,” for example — about the legal discrimination religiously-based employers and businesses get away with (it’s on today’s front page it’s next to the story beginning, “A profitless Web site started by three 20-somethings after a late night dinner party…”)…you might wonder if they could do this kind of exhaustive reporting on the cheap and wonder what value the consumers of this kind of media are getting.
    I spend many hours watching YouTube, but it’s not replacing the Times. It’s replacing ABC, NBC, CBS, etc.
    What I have stopped reading in the Times are reviews of the new season’s TV shows. I can understand reading the Times but I donj’t know why anyone bothers with network TV.

  2. Greg says:

    Whether or not the “coffin nails of mainstream media are already strewn across the open grave” (a morbidly gleeful metaphor for the somewhat doubious proposition that rise of one medium entails the demise of another; people still paint AND photograph, stage plays AND film movies), I’m interested that you never really question if that’s a good thing.
    Is YouTube’s content really the cream from the top, or the bathos of lowest-common-denominator entertainment? Is the democratic anarchy of the You Tube model the best form of media for a Democracy? Is the notion of a professional journalist, or an authority on what constitutes fact, really dying? Is it worth saving?
    In other words, are the benefits of the Times, the “expert content” etc., worth preserving even if the business should find itself running almost entirely at a loss?
    Though I clearly have an opinion, I’m interested to hear yours, and see you weigh these concerns along with the margins an numbers.

  3. Neill Kramer says:

    I think the naval-gazing that is youtube is a passing fad, whereas the quick-witted humor of a Jon Stewart or the profound insights of a Bob Woodward is the real creme de la creme. Of course genius can bubble-up from anywhere, and it sure is worthwhile to have youtube. But we can’t assume that extreme talent will necessarily rise with the paradigm shift. The shift may be sideways, or possibly downhill.

  4. Alan says:

    “And honey, that day is passing fast.”
    Well, the pendulum has swung in one direction, but history is rarely so linear to suggest that changes like this really are permanent. I wouldn’t call YT “navel-gazing” like another commenter here–merely as an archive of genre content it’s enormously valuable–but these trends are *only* trends, not permanent shifts.

  5. robb montgomery - CEO says:

    Great column, Susan.
    I see it like this: Yesterday’s Google YouTube merger must be seen as an emerging business model. Google has the advertising pool and infrastructure to monetize Web pages and YouTube delivers the kind of content many advertisers want: young, smart, creative and with pocket money and spare time to spend.
    Of course neither company went into business to become large media concerns but that is what they keenly decided they had become and are now leveraging their ability to deliver a tightly-focused audience to people who want to pay to be in front of them.
    We are in a disruptive time for established mass media. Call it the rise of the niche verticals but developing niche expertise will be critical. From the experience I have gathered in developing social media I would say that not many news execs are savvy yet as to the many ways these new media story assets can be produced, packaged and monetized.

  6. David Evans says:

    I met with Times people a few weeks ago. There is no way they would ever sell to Google, although good point about NYT being huge revenue for Google. NYT is still trying to figure out what to do with About and there are several other initiatives going on internally, interestingly enough, achieving higher Google rank is a primary objective.

  7. Curiosity says:

    I was wondering where you got the number that $1.6bil would buy out NYTimes? The NYTimes Company currently has a marketcap of $3.35bil; Google could buy a little under half, assuming they could find enough float to do so… and owning less than half of a huge company like the nytimes is a totally different beast than buying a site like youtube outright…

  8. Anonymous says:

    I second the thoughts that it’s rare for one form of media to replace another form.
    What news content producers and managers need to do is to figure out how to use the newest tools to make compelling stories like the one about legal discrimination by religous employers accessible to the web audience.
    Many stories journalists produce are important and need to be read by a wide swath of the public, not just baby boomers clutching to their newsprint.

  9. Robin Hamman says:

    I agree with some of the other commenters here – do you really think the NY Times would have been for sale in an all stock deal to Google?
    I’m sure Google would have loved to buy the times rather than YouTube which, as you say, has no established revenue model.
    The NY Times has longevity and an older, more loyal, audience that YouTube. And it makes money. And it’s got confidence that it has a future – with or without google.
    YouTube, on the other hand, could just as easily be last month’s flavour as Michael Jackson inspired red leather jackets (complete with built in speakers for the super-new Sony Walkman) were by the time my mom got round to saying I could have one.
    Making up a “they didn’t by the nytimes so the nytimes must be old news” hypothesis is simply nonsensical hypemongering. It’s not a sign of a paradigm shift, but rather confirmation of the status quo.
    Longer response at http://www.cybersoc.com/2006/10/google_youtube_.html

  10. fp says:

    The can of worms that a Google/NYT merger would open makes your ponderings pretty far-out on the what-if scale. Why buy a customer? Why attract regulatory scrutiny? Why mess with absorbing a corporate culture built on paid subscription firewalls when your business model is open access?
    YouTube, on the other hand, makes perfect sense. This isn’t about content and it isn’t about media. It’s about data indexing, storage, and transfer. It’s about extending business to leverage core competencies.

  11. tkn says:

    I fail to see how anyone in their right mind could equate the value of the content generated (sorry, “hosted”) by YouTube and that of the content created by the journalists of the NYT. On the one hand you have video clips of inane juvenile stunts, and on the other you have thoughtful, researched information (agreed, it’s not all unbiased). I pity the democracy that decides to use the “information” provided on YouTube over that in the NYT to try to be informed about what its government is doing. Clearly there is a place for amusement and entertainment, but don’t confuse it with real information and editorial content. Of course, now that you bring it up, perhaps it is the case that the US administration is able to maintain its course because so many US citizens are too busy being amused and are uninterested in informing themselves.

  12. wm says:

    “The New York Times Company is an information organization that pays thousands of journalists, designers, business people and administrative types millions of dollars to create expert content that tells people what to think and what to like.”
    So, the only difference between them and you bloggers is that the NYT people are paid!

  13. fh says:

    I sure as hell hope that the Times is not dying out. As fun a diversion as YouTube is, there is no evidence anywhere that this kind of mass masturbation and celebration of the amateur can create anything close to quality content.
    It will produce what sells and what entertains and not what counts.
    I don’t care much about who creates the content I consume I care about it’s quality, and so far there is no indication whatsoever that in this business Google, YouTube et.al. can stand up to bbc, nyt et.al.

  14. Boggled says:

    “YouTube is a platform where cream–user-uploaded videos–rises the the top, to be savored by the world”
    Three days ago, the top front-page video on YouTube was a man eating a cockroach that someone else had swallowed and vomited up for concert tickets.
    Cream floats, but so does sh*t.

  15. Leon KIng says:

    Comparing You Tube viewers with NYT subscribers seems a bit off. My relationship with a newspaper is more intimate – I read multiple columns and and its a regular habit.
    Buying You Tube is more akin to buying a nascent television network – Google has purchased a stake in the 5,000,000 channel universe Its probably a good match for Google – they have expertise in delivering bandwidth and organizing information with a goals of making it useful (something You Tube doesn’t do as well at.) What remains to be seen is how sticky the viewing audience is and whether or not this kind of social network can be converted into a cash flow at the same time.

  16. Closets says:

    Google reminds me of Japanese companies in the 1980’s who began buying golf courses around the world because they were making more money than they could spend at home.

  17. gianfi says:

    I think google like an enormus company interested in business reserch. The only reason of its name is money and control. The way for the solution is only action
    omnia tria perfecta sunt

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