New York Times: Was YouTube Worth It?
In the NY Times Dealbook (see "Was YouTube Worth It?") Eric Schmidt flippantly says its just about monetizing eyeballs.
He's clearly annoyed by those absolutely desperate to label the deal a failure, so they can go back to the old media business, with the situation unchanged. Like the way the newspapers acted just before the bottom dropped out in 2005.
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Market disruptions change value propositions, business models, and revenue channels all at once. This occurs while the prior industry is still hanging on to the older versions, so the two perfectly overlap. As a result, chaos ensues because no one knows which of these will dominate when.
I wrote earlier about this in many publications, and have spoken on this to many business groups - but many still don't get it. Just as web ads and web news/blogs haven't entirely erased print/broadcast versions, they have made substantial inroads on killing the future growth potential of print/broadcast industries.
The new balance for web/print/broadcast will sort itself out over as long as 5-10 years. During this time, the value of web media will rise from zero approaching a significant share of past broadcast/print, while broadcast/print will decline to a fraction of its past value. Because web is rising from zero, there is no way that revenues will be stable or predictable, because no one will be comfortable with the loss of the old value and the undervalue of the new value. E.g. when you disrupt, all values drop due to uncertainty. Get it?
In the short term, neither web or print/broadcast is a good investment. In the long term, web media will have a tremendous profitability - as long as its costs are low, and its reach is vast.
So how long will this take? Look at text ads as a predictor. Less than 5 years ago, you couldn't get an advertiser to touch them. Now they are hot, with 88% of online advertising done by four companies.
So in 5 years, I predict that Google will have a similar, perhaps larger share of the business stolen from broadcast that they raided from the newspapers. By then the remaining print/broadcast reporters won't be annoying Eric Schmidt with this question anymore.