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undoing the YouTube deal

There’s yet more dirt on the Google / YouTube deal. I’ve thought several times already that I wouldn’t be surprised if the deal didn’t close. I don’t remember when it’s due to close, maybe as soon as December. It would be a major stumble for Google, but I’m not convinced that that would be worse than going ahead. It feels to me like the whole thing is built on sand, and that we’re seeing that now.

YouTube is changing so quickly, with tens of thousands of pieces of content being pulled very publically, lots of semi-negative write-ups, the threat of many lawsuits, the apparently desperate last-minute behind-the-scenes deal-making that went on the day they got it done, other video sites moving to share revenue with content providers, etc.

It all has a feeling of extreme volatility to me. It wouldn’t surprise me to see YouTube’s value plummet if this continues for long. Is it too late for Google to pull the plug?

I think there’s probably almost no brand faithfulness in the online video world. Sure, coolness is important, but coolness can change overnight. And then you’re left with what? What does someone who uploads a video actually want? Basically, they want storage space, a URL to point their friends to, and maybe somewhere for people to leave comments or a rating. A bit of revenue would be nice. Your average Joe probably doesn’t care about much more. It’s a bit like buying gas.

I don’t think it makes sense to run out and short Google over this, but I do think the potential for a major disruption is there. If it happened and people suddenly saw Google as just another company, capable of making big errors, there might be a disproportionally large adjustment in their stock price.

Pure speculation of course. I’m very interested to see how this plays out.


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