Google's YouTube Deal
ROBERT SIEGEL, host:
From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel with this question.
How long does it take to go from zero to 1.65 billion? The answer is just under two years if you're a widely popular Internet Web site and Google ends up buying you. That's the story of YouTube, which is being purchased by Google for $1.65 billion in stock.
For those of you not familiar with YouTube, it's an online warehouse of short videos. Anyone can upload, anyone can download. It's all free and about 100 million videos are viewed on the site everyday and the topics run the gamut.
(Soundbites of YouTube videos)
DANIELLE: My name is Danielle and everyone thinks I smell, but I don't think I do. They should go live in a shoe.
Unidentified Man #1: As soon as man acquires this sense, he begins to feel pleasure through it. The pleasure is called supreme life.
Unidentified Woman #1: For those of you who don't know, I had a birthday yesterday.
Unidentified Man #2: My favorite kind of blinds in the world, the vertical blind. The blind of the bank and the rented townhouse.
Unidentified Woman #2: (Foreign language spoken)
Unidentified Man #3: Yellow pages, it's a dying business.
SIEGEL: A YouTube audio sampler. Joining us from Boston to talk about YouTube with us is Hiawatha Bray, technology reporter for the Boston Globe. Hiawatha, is $1.65 billion in stock a lot of a little for a company like Google to pay for YouTube?
Mr. HIAWATHA BRAY (Boston Globe): Well it's a lot. It's always going to be a lot to someone like me or you, but is it worth it? I tend to think yes. YouTube is estimated to have tens of millions of users world wide every single day. Right now they barely have any advertising on the site at all. Simply by Google taking its wildly successful advertising business and linking the ads to those YouTube videos, it's hard to see how they don't make money in the long run off this deal.
SIEGEL: Let's clarify first though in terms of the technology of YouTube, is there anything about it that's any different from movies on the Web that we've seen before there was YouTube?
Mr. BRAY: Well, there are a number of sites that do this kind of thing. I think what YouTube did was they came up with an elegant simple, way for people to do this that just made it very easy for anybody to take a digital video that they had, upload it to the site and then they would process it into a version known as Flash video that can run basically on any computer out there. You don't need any special software. You know how a lot of times you need a special player to look at video that you pull off the Internet. Well, the particular player that this uses is called a Flash player, and almost every computer in the world actually has one already.
SIEGEL: But what's to stop somebody else from starting another Web site that would begin in the same obscurity that YouTube began and say we don't have any advertising on it. You get straight to what you want to see without anything coming on first and just taking away tens of millions of eyeballs from YouTube?
Mr. BRAY: Funny you should ask. There's a company that tried something like that. It's called Google. Google launched Google Video I think what, about a year or so ago, and its basically gone nowhere. They've got something like one fifth the audience of YouTube, and they saw that and they said, hey, wait a minute. We're not doing this right, these guys are. That's God's way of telling us that maybe we ought to whip out the checkbook.
One of the reasons why eBay was such a huge success is that they created a community so that everybody didn't just buy things there, they hung out there. YouTube did the same thing. People hang out there and that's one of Google's biggest problems. People just go there, search for something and leave. Google needs something that'll make people stay there and that's what YouTube can give them.
SIEGEL: I'm just thinking back to some of the very heady optimism I heard about the AOL/Time Warner deal a few years ago, when it was pointed out that AOL had shrewdly trumped CompuServe and the other competitors it had. A year or two later it didn't look like such a brilliant deal. What insulates Google against a similar disappointment?
Mr. BRAY: Well I think we're living in a different world now. This is technology. I mean one of the problems with AOL is that they were sort of a walled garden. They were sort of an isolated Internet community, one of the largest, but it didn't have a pure Internet interface so that anybody could come and go as they pleased.
Both Google and YouTube are wide open. There are no walls here. Another major, major difference is the importance of broadband. The whole reason that people are now routinely watching videos on the Internet is that something of like half the Internet users in America today have broadband and more are getting it all the time.
When you can download these things in a few seconds, it becomes a matter of second nature to look at video on the Internet. So before broadband came along, some of these deals might not have made sense. In a broadband world, it makes immense sense.
SIEGEL: Hiawatha Bray, technology reporter for the Boston Globe. Thanks a lot for talking with us.
Mr. BRAY: You're welcome.
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