Now that Google has bought YouTube, what do you do if you’re an executive in the new media division of, say, Viacom? Or NBC? Do you partner with Google? Do you roll your own service? Do you sue them? Some combination of all three?

In the past year, whenever a media rights owner has protested their stuff was up on YouTube, they would invariably be met with a chorus of blogger-know-it-alls (hey, I might have even jumped in!) telling them they were 20th century dinosaurs, that they should let their stuff flow freely over YouTube, get over their issues, enjoy the free exposure, and join us right-thinking Web 2.0 people. That may have made sense when YouTube was a scrappy, independent start up.

But does it make sense now? Now that Google owns them? Is doing a license deal with GooTube basically ensuring you’ll have the same dependency on them in 5 years that we have on the Middle East (and Venezuela!) for oil?

Maybe. Consider this quote from Chad Hurley earlier in the summer:

I think we’re in a good position because we have created a marketplace for video and it is this this natural network effect that we’ve created where we have the most content becuase we have the largest audience and that’s going to keep continue to drive each other. (emphasis is mine)

Both sides, both the content coming in and and the audience we’re creating. And it’s very similar again to the eBay issue where they had an auction product that gained critical mass. Yahoo! came by and started creating their own technology, potentially better technology, but they didn’t have the consumers there to pull it off. So we feel we’re potentially in the same position with our video site.

I think this claim, that YouTube has built a network effect like eBay’s, is harder to unravel than it seems on the surface. I’ve thought about it a lot, and am not sure Hurley’s right. There are reasons why true peer-to-peer marketplaces like eBay tend to generate centralized, easy-to-defend network effects; I’d argue YouTube is not really such a marketplace.

Instead, what I do think has happened is that YouTube is now the defacto place to search for video, and has built a temporary network effect around that phenomenon. The reason this has occured is because (a) the stupid way we’ve architected video on the Internet to date makes it hard to search for files and play them back easily, and (b) YouTube’s users have the most definitive library of video clips ever created. Some of it, uh, not really legally licensed.

To illustrate: try searching for Daily Show clips on the Internet with Google, and then repeat on YouTube. It’s clear which is better. I am now trained to look for the latest DailyShow clips (and almost every other type of video I can think of) on YouTube. I think that’s why Google bought YouTube, by the way. Not just for the so-called eyeball traffic.

That GooTube is in a position to own video search is a very dangerous thing for media companies and rights holders.  If GooTube is able to maintain their position and build upon it, if “a” above doesn’t get solved and “b” continues, GooTube becomes the Internet version of Comcast, but with 80% homes passed, not 20%. It becomes the one company you have to do a deal with if you want your content seen (because everyone is going there to find video, because general search on the Internet doesn’t work).

So, if you’re the head of MTV New Media, do you go and license all your content to GooTube now, helping them to cement their position as the one place to go for video online, and ensuring your future subservience to them? Doesn’t seem like the smart move to me.

I don’t think suing helps, either, by the way. Although I’m sure that will be a strategy for some (you can see people licking their chops to get some Google cash). I think the better strategy is to compete. It’s not that hard to build a great sharing site like YouTube’s. Go do that if you’re MTV.

If Comedy Central had a site that was as easy and fun to use as YouTube’s, where I could find a great stash of Daily Show and Colbert clips, where I could embed them in my blog or get the latest clips delivered via RSS, I’d be happy. I’d be even happier if I could get a high quality version of the clips — I’d probably be willing to subscribe — that I could download without DRM.

The great danger for GooTube is that their temporary network effect will go away if their library is diminished. The vaunted network effect of the old Napster amounted to very little when the music was taken away. Same with GooTube. If they have to start taking down lots and lots of clips from the service, their position as the place to search is diminished. If people like MTV and Comedy Central really compete, and offer compelling services with their programming (and indeed, MTV has started with their beta iFilm service), and quit hiding the clips behind javascript so they can’t be properly indexed and searched, that will also hurt GooTube (but will help Google!).

So, I think the answer to the question I asked at the top is: don’t do a deal with GooTube (or do a very, very limited deal); ask them to remove the unlicensed stuff you own from their service; but don’t do that until and unless you’re able to offer a video service that is just as good as YouTube’s, if not better. Either your own, or through a partner.

I’ve been mulling the Goog-YouTube acquisition the past week and wanted to share some thoughts.

First off, it’s impressive to see GOOG effectively admit their own video product wasn’t going to succeed. That’s a hard and difficult thing for companies to do.

Second, the “Google is an engineering-driven company” meme is now dead. If it were such a company, GOOG would have done what Microsoft has done — sit on the sidelines, and proclaim building it is cheaper than buying it. Instead, Google saw a big, fat inventory-rich service, swallowed its collective pride, and snapped it up (conveniently blocking Yahoo and MSN from encroaching on their dominance of the Internet advertising space at the same time).

But what’s really struck me about the acquisition is that it so perfectly captures this moment and time in our business, and that this particular moment is so full of ironies. We’ve come full circle to a point we last reached in, say, 1998 or 1999, where acquisitions are not driven and dictated by quaint notions of math and value, but are instead about showing you have momentum and are a dynamic player.

To dicker over price (as Yahoo! appears to have done) proves you lack momentum and dynamism. To question the value and actual worth of YouTube, as Mark Cuban has done repeatedly, is to stand up and declare yourself a heretic and and an idiot and irrelevant all at once.

Of course, maybe those two parties know something we’ve all forgotten (or perhaps that some younger folks never knew). The last multi-billion dollar acquisition of a video-focused service was, of course, when Yahoo! snatched up Mark Cuban’s Broadcast.com. And we all know what happened there.

I have no idea if this is a repeat or not. I have been damned impressed with how quickly YouTube built a strong brand name and loyalty from its users, and it’s clear to me it is far more valuable than Broadcast.com was in 1999. But I just spent the morning reading through the archived articles about the Yahoo-Broadcast.com acquisition, and the parallels are amazing; both deals resonate with analysis from the so-called experts trumpeting the (abstract) notions of “consolidation” and “momentum” and “rich new advertising opportunities.”

It’s our reaction to this that scares me. Our call for big players to do something big (which will probably drive Yahoo! to buy Facebook at a premium) just to prove they’re not sclerotic . Won’t it end up leading to tulip mania, again?

Why don’t we, instead, call this a “one off.” Face(book) it, the YouTube acquisition was a very risky play. And Google is pretty much the only party that could afford to take the risk. Whether it’ll end up as their broadcast.com or Geocities, well we’ll just have to wait and see.

First: I have to caveat everything I write here because I haven’t been able to look at or use Google Video yet. That the service was announced, but not launched, is in and of itself lame.

Second, based on what I’ve been able to learn about Google video, it would seem they have not really done anything useful. Instead, they appear to have picked a strategy that adds to the tower of Babel that is the downloadable video internet marketplace today.

What should they have done? Simple, same video marketplace idea, but without a DRM solution. Give us paid-for content, but in a more-or-less standard wrapper — MPEG4 or the H.264 flavor, that works on the largest variety of devices and that can be burned to DVD without restriction.

I would guess Google will argue that they are doing that (the Charlie Rose example that has been cited), but that they’re also want to offer media companies and producers a choice between that approach or some form of DRM distribution. Indeed, here is their pitch:

Owners also have the choice to offer their content with
or without copy protection – enabling them greater control over its
distribution.

Sure, it sound sensible and logical. But, by giving this choice they’ve made a real mistake, because they have forfeited the market-making impact they could have had, and their opportunity to build a video marketplace that actually provides consumers a decent experience. Most media companies and producers offering paid-for content will choose to have their content copy-protected, and unless I’m missing something, that copy protection probably won’t work with a significant range of devices (and I doubt it will provide for DVD-burning, so sneakernet won’t be an option, either).

So what Google has ended up with is a second-rate (at best) initial content offering and a third-class consumer experience. With a little bravery, they could have focused on a first-rate consumer experience — and a solution without DRM is the only consumer-friendly option for now. Combining first class consumer experience with their market-making traffic would have made Google a real threat. Indeed, with that combination, they would need just one success — one — to get the ball rolling. One example of a video selling 1 million, 2 million, or 3 million copies, and they’d have folks beating down their door. And without a connected device strategy (like Apple), it would be a lot easier to sell that many copies of a video if it could be burned to DVD; or copied to a Tivo; or to an iPod.

PS: my support for a non-DRM solution isn’t borne out of some anti-copyright agenda. It’s just a practical view, outlined here.