Here's an update of sorts:
Quote:
http://money.uk.msn.com/investing/ar...mentid=1359407
Logic emerges in the YouTube deal
We’re already seeing that in the latest deal to emerge in cyberspace. Media executives gasped when Google paid an incredible $32 per viewer for YouTube, a website for user-posted video clips that by some measures looked amateurish and certainly wasn’t generating much revenue. It even eclipsed the $22 per user, $600m in total, that Rupert Murdoch’s News Corporation paid for the community network website MySpace.com
Google has moved fast to show that it has value. The video website on Tuesday signed an exclusive deal with Verizon, allowing the US mobile phone group’s users to view a selection of YouTube video clips over their phones. For Verizon, that gives a unique selling point to its customers, but for Google the deal offers much more: traction.
Holding your users: traction
The problem with ‘real estate’ on the internet is that it lacks traction. News Corp or Google can buy a site, but it cannot control the users who give that site value for advertisers. Teenagers particularly flow freely from even the best established sites when something even more cool comes along. Though big sites with more users and more stuff are an attraction in themselves, kids follow peer-group leaders who are easily turned off by anything that becomes mainstream.
Compare this with physical real estate. Heathrow Airport is about as cool as great aunt Enid, but it doesn’t matter. No-one can replicate that airport’s physical proximity to London and all the attendant infrastructure from roads and rail links through to support services. The greatest assets that most airlines own are not their aircraft, but the precious Heathrow ‘slots’, rights to park their jets at a particular gate at the airport at a particular time.
The nearest to a Heathrow on the internet is eBay. This company uses a network effect to bring real benefits in prices for the millions of buyers and sellers it brings to a single marketplace. It’s unthinkable that anyone else could create a better eBay without some technological breathrough to link buyers and sellers even faster.
Many companies who have bought community websites fondly believe they can replicate those eBay-type network effects. They may well be wrong.
ITV and Friends Reunited
The problem has already emerged. ITV paid £120 million for Friends Reunited in December last year. At the time it had 3.3 million members. However, internet research firm Hitwise’s latest figures show that Friends Reunited’s share of the mushrooming “communities and chat” market has almost halved from 3.25% when ITV bought it to 1.82% last month.
Companies like ITV stand out as losers in this new world. From 47% of the UK advertising spend in 2005, ITV now stands at 42% and may have much further to fall. Relentlessly youth-focused, advertisers don’t want to spend money putting their products on commercial TV if youngsters are glued to the internet instead. Though the middle aged population has far more money, they are thought to be less easily swayed from brand loyalties. No-one under 20 ever says: “I swear by Persil, and I never use anything else.”
The next generation
What to expect now? Expect services that provide real traction. Not wobbly videos of dogs riding skateboards, but storytelling with suspense and drama.
Given the audience that amateur video clips can offer, independent film makers are now seeing this as a great new outlet without having to get Hollywood backing. Better still, web-based soaps can generate traction for sites as viewers log back in every week to see what happens next. Science fiction? No, its already happening at Channel101.com and other places.
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It'll be interesting to see if they can get rid of/prevent the distribution of copyrighted material without the holders' permission or make people pay for it like with music, and whether the 'internet soaps' can take over.
In the original article they mention Google's supposed plans for for self publication i.e. authors/writers being able to publish themselves without needing to get publishing deals. I like that idea, it will save a lot of people a lot of hassle and expense - it's already available to an extent where you publish your own work but you also have to buy quantities of it and distribute it yourself.
