Video Killed the Media Star

All anyone seems to talk about now is video. Today, another two announcements emminated from this sector, namely:
- Yahoo7's launch of their online video service
- Rumours that Google is going to buy YouTube for $1.5b

To me, both announcements look equally absurd.

Firstly, Yahoo7. Seven finally seems to have forged a partnership with genuine potential following a couple of failed attempts (most notably AOL7). Yahoo7 has some good content from 7 and Yahoo, plus Yahoo's services, and is shaping up to be potentially compelling. The jury is still VERY much out on the true viability of convergence (particularly free-to-air TV and the internet), but Yahoo7 is a least something with the potential to challenge nineMSN (if only Yahoo Mail had the penetration of Hotmail!)

However, why would you try to compete with YouTube?! I know why Yahoo would like to, and both they and Google are having a red-hot go. But they're failing terribly. Why would a good new opportunity like Yahoo7 want to slot in a service that, realistically, is going to play a weak second fiddle (if not third) to the market leader? Sure it's linked in to their IM, content, etc. but in the end it won't beat YouTube, no chance. And there is nothing worse for a media company than a second-rate new media site whose failure is there for all to see. Indeed, it is this lack of traction in new initiatives that is starting to erode Google's own divine status.

This brings us to YouTube and Google. Mark Cuban, the internet billionaire with the best timing in history, and an outspoken critic of many things, recently added YouTube to his list. However, he's not alone. Essentially, the criticism of YouTube is that it couldn't survive without illegal content and at some point it is going to have the pants sued off it - hence there is no viable business model. Several Wall Street analysts agree and are encouraging listed companies to keep a wide berth.

Google, however, is rumoured to be looking at a $1.5b acquisition of YouTube, rumoured being the operative word. Why?, you might ask. The greatest asset YouTube has is the brand. It may even be as big as Google, and that in itself is worth a fortune for a new media company. Google, too, is sick of losing to YouTube and with $10b+ in the bank this could be a chance to buy a win (take note of what you're up against, Yahoo7).

But even the brand can't compensate for Cuban's criticism, if it turns out to be correct. And herein lies the huge problem with video sites. They are killing traditional media sites by pulling away their viewership (TV is particularly worried). However, because of the nature of both their content and users, it is hard if not impossible to monetise this traffic. So they have the ability to STRIP VALUE from the media sector in general. We are in the early days and media spend here is negligible, but there are serious questions around the viability of the video model.

No doubt at some point a viable model will be created, but without the commercial content it is doubtful that the novelty of watching "uncle sam's pants catch fire" somewhere in Alabama will keep people coming back in the medium turm.

I tend to agree with some of the naysayers at present, unfortunately; this may be another example of a web 2.0 innovation that will never make money in its CURRENT incarnation. But good luck to Google and Yahoo - they're both richer than me so perhaps they know something I don't. Or maybe they see where this is all going, and want to be the first ones to get there.