Great time to sue GooTube

October 12, 2006

"Only a moron would buy YouTube", wrote Mark Cuban. A week later, Google confirmed it was negotiating a $1.6 billion acquisition deal with the online video giant. Since then, bloggers have been fussing over whether such a deal poses legal threats to Google. It obviously does; why else would anyone talk about it? $1.65 billion is too much to pay for a company that is losing money. Unlike popular myth, Google does not make bundles off YouTube by displaying obscure ads on the site that have little relevance to the video being displayed. People come on YouTube to watch the daily show, or rant over rap star Diddy's self-promotion videos. What people don't use YouTube for is reading textual content. Google makes money only when there is content, and YouTube has very little of it. If YouTube were making these bundles of cash, as some analysts believe, they wouldn't need venture capitalists for friends.

The first, second and third company to sue Google will make headlines across the web and on print. This is a great opportunity for the media moguls to claim some spot light. It is a marketing opportunity. If NOVA sued GooTube; everyone will rant over it for about three weeks, and then forget it ever happened. Early adopters of news have a small attention span. What it will do, though, is create a lot of free publicity regardless of the outcome of the lawsuit. Negative publicity is not as good as positive publicity, but it is still better than no publicity at all.

Lonelygirl5, for example, turned out to be a fake. Her ex-fans hate her. She certainly wasted my precious time. But she is more famous now than ever before. The point here is that some publicity is almost always better than no publicity at all, especially in an overcrowded market.

It is true Google did not have the traffic that YouTube did, but Google has all the resources in the world to channel in the masses. If you look at Google Videos, it seems to be a half hearted attempt by any standard. I would be all for this deal if Google at least tried its best to make it out on their own. But they didn't. I love Google, but this is one crazy deal. 1600 million dollars? like, come on. YouTube does not add any brand value to Google either. Furthermore, unlike the case with Yahoo!, Google was under no pressure to buy out a large company like this. Google has some of the smartest hackers in the world who could, undoubtedly, code a much better video site given a few months. Such a radical buy out is simply not the Google way. Maybe they know something we don't. Google has been tinkering with video ads for a while now and it is obvious that this serves some grand strategy for the next three or so years.

While Google goes ahead and dumps some stock into Chen and Hurley's pockets, it opens up the room for a media company to come along and sue Google. Every web 2.0 blogger has their eyes and ears on just such a lawsuit, and a carefully planned publicity stunt is just waiting to happen. As Seth Godin is fond of saying; 'being safe is risky'. It is true. So go ahead, do something outrageous, sue Google.


Notes:
1. I will be among the crowd that rants against whichever company that sues Google <3
2. Interestingly enough, YouTube is among Bill Gates favorite sites. I wonder how he feels about this deal.