Why Youtube? Why now? What next?
- 10 Oct 06, 12:39 PM
Youtube made it from garage concept to acquisition in just 18 months: a dream shared every entrepreneur on Dragon's Den etc. But how did they do it, and how do you spot the next Youtube? To me the answer breaks down into three concepts:
- the technology
- tapping the zeitgeist
- the needs of the acquiring corporation...
...1) The technology. There's been a lot of hype about Web 2.0 but basically it amounts to this: the essential technology for running a web business is available more or less off the shelf, allowing a) rapid prototyping and b) rapid scaling once the idea works. So you do not need megamillions of venture capital dollars to get a product like Youtube to market. What you DO need is the right people - the Economist points out this week that there is a scramble for tech, marketing and management talent. Here's why: with the technology becoming commoditised - ie easy to do - the critical edge is gained by having the right mix of excellent people. Clearly somewhere in the 67-strong workforce of Youtube was that mix, or they would not have kicked the butt of Google's own in-house concept, Google Video. However the flipside of this is that the magic dust in Youtube was NOT in the technology: the tech they invented to run the site was not as important as what comes under the next heading...
2) The zeitgeist. Youtube picked up on three things going on: a) social networking b) daft mobile phone videos among teenagers c) mass acceptance of copyright theft. I had been aware of Youtube but I noticed it take off during the World Cup. People would film themselves watching TV in a bar, film the goals off the screen and the response; or they would film the action on the pitch from their seat in the stadium and then film their own gurning face reacting with joy to a goal. This became the vicarious global audience for the world cup: you felt you were there in a way all the Alan Hansen stuff did not quite provide. But the footage filmed at the game or off the telly was technically illegal: I mused at the time that the sponsors, whose advertising was being reproduced with every remake of the Zidane headbutt, sent all over Youtube in many different guises, would not be complaining. It turns out the people worrying were the music video people at Warner/Universal/Sony and also the telly people at CBS/NBC - all of these were involved in yesterdays deal which sees them get a cut of overtly ripped-off content. (It's still not clear if Sky gets a cut if I point my moby at the screen during a goal and upload it to Youtube). This World Cup experience encapsulates all three bits of the zeitgiest - networking, videoclipping and copyright theft. Most marketeers spend their lives in search of solutions that can align them with a and b - but are prevented from doing c! Hence yesterday when Youtube went legit, I think a bit of the zeitgeist died (if a geist can die, or is it sterb?)
3) The needs of the corporations. Google missed out on buying MySpace. Rupert Murdoch bought it instead. Then the founder sued the former owners for selling it massively too cheaply. Ergo Google did not want to miss out again. When I talked to Google honchos about Youtube they would put on a pained expression like a kid who says why did you buy me an apple when I wanted ice cream. That was just a couple of months ago. They wanted to make Google video work but it did not have that vital ingredient - mojo. It was like a video service your mum designed. So when Youtube comes along, with its 100m users busy making their own global community, BAM! it has to buy it. Rumour has it that Chip n Dale (as I always think when I think of Steve Chen and Chad Hurley, the guys that run YT) extracted a cool $50m in the final hour of negotiation! That's why me and a load of other journos were kept hanging around waiting for the announcement. For the sheer audience value and advertising revenue, the acquisition was a must - but the price Google paid was probably overinflated.
So what does it mean for the future? From the lip: (i) Youtube was not tech innovation it was product innovation. That means Web 2.0 is validated as a concept; (ii) The vital bit of Youtube's mojo was laxness re content - that's why the Chinese protest, the American GI snuff movies, the inevitable porn all stayed up there long enough to be seen. Interestingly yesterday's deals with media majors was all about keeping as much of the copyright laxness as possible. (iii) Youtube was brilliant because it gave you a glimse of what TV could be like without networks or copyright or censorship - ie if Rupert Murdoch, Michael Grade and whoever the poor boss of ITV is going to be did not exist. Publish yourself and let the market decide. Make your own TV content - can it be worse than 80% of the rubbish that is produced globally? Answer no: like reality TV, reality mpeg is compelling, dangerous, real, human, unexpected - ie everything TV is not once great proposals have been through the mill that grinds good ideas bad.
Finally how do you spot the next Youtube? You have to know what a big, growing, cash rich corporation will need to buy in 18 months. It needs to be able to build a youth customer base quickly. It needs to leverage the power of tech to innovate rapidly, and the power of mass technology, like mobile video. I've no idea what it is but good luck if you do!