YouTube is a money loser. Google bought it because it ties user more tightly to Google.
Analyst Josh Bernoff of Forrester Research said...People don't have any emotional connection to a search engine, but according to Bernoff, it's far tougher to leave a company that creates social connections. "You'd be leaving your friends," he said. YouTube users post their own videos, pictures and music to share with their friends and family. They've built a community. That's what Google is buying.ABC News' Mike Cudgell suggests that this isn't going to work since it is so easy to change search engines. If it's easy to change, then people will go to the best product available. Starling Hunter disagrees.
Theoretically it is true that there is little cost in switching search engines, at least little economic cost. Yahoo and MSN and Dogpile are just a click away. And yet, I almost never use them. The main reason being is that for me at least, Google has become the de facto standard. It is not only the market leader, it is widely perceived as performing searches extremely well. For me, and perhaps other web searchers, even if I use another service, I'd probably still do a Google search as well unless -and here's the important part- I was very certain that the other search was far, far superior.I completely agree with this. I use a mix of Yahoo and Google for my searches. I don't see a need to even try anything else. They work and that's all I need. The switching cost may be low, but the marginal improvement in search if I switch to, say, Dogpile, can't be that great. The cost I pay to switch, like Starling says, is an emotional one. The cost is the anxiety that I might not find what I want.
This brings me to my take on the whole thing. If Google thinks that they're going to get a community out of YouTube that is somehow inextricably linked to their search engine, they're quite mistaken. The beauty of the the Internet is that the features are composable. That is, I can create content by drawing from a wide variety of sources and not care where those sources are hosted. I use YouTube for videos, TinyPic for images, Mr. Linky for my link lists, SiteMeter as my hit counter, Technorati for link counts and so on. It's all one to me where they come from. If Mr. Linky was associated with Yahoo instead of Google, I'd still use it since it does what I want.
As an example, I used to use the TTLB blog ecosystem to guage my links. I found I like Technorati better. I dont visit TTLB very much any more. If YouTube had been associated with TTLB, I'd still use Technorati. The connection isn't strong enough.
Maybe all of this business analysis is overthinking the problem. Maybe Google bought YouTube because YouTube is cool and Google can afford to buy anything they want. "It was shiny and I like shiny things so I bought it."
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