peterme.com

Jakob proudly points to an article in The New York Times on Google's acquisition of YouTube, where he is quoted, "What does a video storage service have to do with search?" Suggesting he doesn't appreciate the reasoning behind the takeover.

This sentence reveals two drastic oversimplifications. Taking the second, first, Google is as much an advertising company as it is a search company. In fact, without advertising, there would be no search. Google's true genius is not in the search engine, but in figuring out how to extract massive value from that search engine, with a brilliant approach to advertising that plays directly to the web's strengths (Think "long tail," think algorithmic, think decentralized, think results-driven, etc.)

YouTube is not "video storage service," but a video *sharing* service, much like Flickr is about sharing photos, not just storing them. With sharing you get human interaction, and with such interactions, you get emergent behavior. And with emergent behavior, you get all manner of unpredictability, such as a site becoming the 10th most visited on the entire web in the less than 12 months.

And so, if we ask, "What does a video sharing service have to do with web-native advertising?" we begin to get a sense of why Google was quite smart to pay $1.65 billion.

Posted by peterme at October 15, 2006 09:10 AM

Trackback Pings

TrackBack URL for this entry:
http://www.peterme.com/mt/mt-tb.cgi/500