Google-YouTube deal is a new low for the Net

Online video acquisition proves that market share trumps innovation in Web business

Google’s purchase of YouTubehas set off a flurry of analysts asking questions like, “Is this the bad old days of dot-com returning?” Or, “Why would anyone pay $1.65 billion for a year-old company that hasn’t made a dime?” I am afraid these gurus are missing the point. You see, they don’t realize that the Internet has finally sunk to its own level -- and that level, my friend, isn’t too high.

Let’s back up a moment and look at television programming. Have you ever wondered why a respected journalist such as Dan Rather hosted a show like 48 Hours? Each week, 48 Hours spends a half-hour going over a murder, leaving the viewer hanging between pricey commercials until the very end of the show, before revealing if it was the husband who killed the wife. It panders to folks who like to hear the worst about people, with all the gory details.

More recently, you might ask why a former United States Congressman turned political talk show host, Joe Scarborough, would add longer and longer segments to his show about missing girls in Bermuda, endlessly interviewing the distraught parents, friends, and relatives about whether they think she’s alive. The answer, as we all know, is ratings.

Unfortunately, the same is now true of the World Wide Web.

In the old days, one Internet business after another crashed because, as it turned out, they had nothing of value to offer. For example, a company named Ten Square tried to buy access to every gas pump in America to resell services, such as discount coupons for Starbucks coffee. Venture capitalists invested millions. They believed that the Web business, no matter what the idea, would eventually disintermediate the brick and mortar versions of these services -- and so they were in a race for the No. 1 market share position.

But market share doesn’t pay the bills. Eventually, when it became clear that no one was interested in reading the gas pump for a 10 cent coffee coupon and the companies had squandered all the investment dollars, things began to hit the fan. It came to a head in April 2000, when a lot of these companies disappeared, all at once.

But now there appears to be a difference.

What Google is doing by paying $1.65 billion for a not-yet-profitable startup is declaring that if you do have market share -- meaning millions of visitors -- that alone can turn into huge revenues, thanks to Internet advertising. Perhaps Internet advertising just wasn’t ready for prime time in the 1990s. But whatever the reason, Google bought YouTube because it owns almost 46 percent of all visits to video Web sites.

YouTube gets something like 100 million page views per day. Does it matter that 99 percent of them are a waste of time? That these homemade videos have no redeeming quality? Not in the slightest. To whom should it matter?

Google and its competitors are fighting for market share because, now, market share in and of itself means success. From now on, “the next big thing” will not mean great technology; it will mean whichever online entity can come up with the most “viewers.”

If that means the content is at the bottom of the intelligence barrel, you won’t hear investors complaining and you will see a lot of copycats. But what you won’t see are inventive twenty-somethings putting their skills toward coming up with innovative technology to change our lives.

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