When one is asked about Google’s incredible success to date, and what they did so right, the obvious answer will likely involve an explanation of the brilliant technologies that make up PageRank and Adwords. But if one looks under the hood, there’s also a not-so-obvious reason […]

When one is asked about Google’s incredible success to date, and what they did so right, the obvious answer will likely involve an explanation of the brilliant technologies that make up PageRank and Adwords.

But if one looks under the hood, there’s also a not-so-obvious reason that played an equally critical role in Google’s success: the fact that the web has been predominately comprised of text. Text affords Google the friendliest technological and legal environments to apply and optimize its superior algorithms.

But what happens in a future where video, not text, is the fundamental element of the web? If Google cannot translate and convert the advantages it had in a text-dominated web into a future web of videos, Google is in trouble.

In a web comprised of text, Google could dominate the market in terms of aggregation, search, and distribution without the need to strike one single agreement with content owners. All Google had to do was crawl and index.

But, in a web comprised of video, Google must deal with content owners and strike licensing and distribution agreements, as neither its technologies nor current copyrights laws enable it to autonomously automate the aggregation of a video library without the explicit consent of content owners.

With that in mind, let me now jump to the big news of last week — the announcement that Rupert Murdoch’s News Corp and NBC Universal would launch an online library of big media video assets that could be licensed by any online distributor, provided they accept the terms and conditions set forth by big media. Towards such ends, the new big media joint venture also announced that Yahoo!, MSN, AOL, and MySpace had signed up as licensees and distributors.

Given the significant difference between a web of text vs. that of video for Google, the big media companies made a very smart move last week. Although not necessarily a checkmate, it was a “check” on Google. If all the other media companies fall in line as well, then it could become a “checkmate” against Google when it comes to big media content.

In other words, Google would have no choice but to accept the demands of the big media companies for the licensing and distribution of their content. The only way for Google to regain leverage against the big media companies, at that point, would be to change the game altogether (e.g. by owning content and becoming a full-fledged media company, as I had suggested they might in my last post).

But at the end of day, it may turn out that both sides of this titanic struggle were merely pawns in a higher-level game benefiting one single player… Rupert Murdoch.

Using Google as the red herring, Murdoch may actually have succeeded in rallying all of his competitors to join forces by contributing their combined digital video assets into one pool (which he has significant control over). But through his ownership of MySpace, Murdoch is in a very unique position relative to all his big media brethren.

Namely, he will be the only one that ends up owning both content (via the new joint venture) and distribution (via MySpace) in any material and meaningful way.

Owning the whole value chain has always been a strategy that has served him well, and by the looks of it, he’s going to continue enjoying such advantages. Not only that, Murdoch could very well have out-maneuvered Google by positioning MySpace to ultimately become what YouTube was supposed to be.

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  1. GigaOM » Will video kill the Google star? Monday, March 26, 2007

    [...] the advantages it had in a text-dominated web into a future web of videos, Google is in trouble. Continue reading Share/E-mail | Sphere | Print | Topic: Web | Tags: google, MySpace, Rupert Murdoch, [...]

  2. Jesse Kopelman Monday, March 26, 2007

    Fox’s ownership of MySpace is what is likely to break the coalition, though. If the other media barons see viewers migrating from YouTube to MySpace and not back to them, they will turn on Murdoch pretty quick. Anyway, the real question is not who wins under todays bogus rules, but who develops the technology to actually search video (I’m not talking tags but raw video). They will be the next Google. Of course, it might be Google themselves who make this breakthrough . . .

  3. RandomThoughts Monday, March 26, 2007

    The talks between NBC and News Corp are important to both Viacom and to Google. If Viacom wins the lawsuit, YouTube would be at the mercy of the content providers. If YouTube signs on with NBC and News Corp, YouTube would have good content and leave Viacom with no access to the huge audience that YouTube brings to the table.

    Success at Google has almost been taken for granted, but when you look at it, what outside of search and ads have they done well in? I think 99% of their revenue still comes from advertising. Can they expand out into video? I just don’t see that happening. Content is king, I think that the Viacom lawsuit is just the first step of the content owners plan to monitize content.

  4. News. also has a stake in ROO who are in the process of aquireing Wurld Media a marketing and p2p content distribution company so theres another play in the space for Murdoch.


  5. Google has another issue with video — an architectural issue. Google infrastructure is optimized for centralized indexing servers that then serve up snippets of information very quickly. The kind of video services most people want almost surely won’t work in such an architecture. P2P of some sort seems inevitable — looks to me like Joost is on the better path.

    My guess is YouTube is the Broadcast.com of this era . . .

  6. Ian Schafer » Blog Archive » How Google Will KO Murdoch. Monday, March 26, 2007

    [...] (one of my favorite blogs, BTW) just published a great post entitled “Did Murdoch just KO Google?“. From the post: …if one looks under the hood, there’s also a not-so-obvious reason [...]

  7. I think the fundamental assumption you have made is wrong. Video is NOT the future of how we share information. Text will continue to be the preferred mechanism for doing this.

    Video is really inefficient and the cost to produce professional video that is actually worth watching is high. Vlogs are mostly useless. You can’t skim a Vlog – you CAN skim text. There is too much information for me to watch videos. Why would I watch CNN when I can go to the site and read the relevant articles?

    Video is only useful for live events such as sports broadcasts or press conferences. I really don’t want to see 99.9% of people on video – please save my eyes and ears.

    Everyone seems to be running and screaming towards video. Great. A few good companies will emerge and the rest are just fools.

    The future is text, not video. Mark my words.

  8. My cordless crystal ball needs batteries; so, I can’t be quite as certain as Jay – but, mostly, I agree. As far as my own taste is concerned. Which is why I don’t visit YouTube. Then, I don’t visit MySpace, either.

    Content, intellectual stimulation, even aggravation, knowledge and understanding ain’t bad qualities to serve up online. Everything else is the latest news about Anna Nicole Smith.

  9. Eideard, you crack me up.

  10. AgnosticMaven Monday, March 26, 2007

    Robert – In this crystal ball gazing, you could be right but the hypothesis is a little weak.
    While the Web continues to evolve to human cognitive abilities – Video is visual imagery. The important thing is that for humans too – language drives thinking, not images. You can try it out – you have to ask the brain in some language context to conjure an image. There is no image based searching the way we think. So until you ask the brain – ‘the game last night’, ‘great car’, ‘tasty food’ – it will not fetch any images. So it will not be a correct assumption that video becomes the dominant web element and not language(text). Multimedia support will keep increasing but it can always be accessed by smart tagging. Thats what Flickr pioneered with pictures. Googlers will get smarter in tagging video (or acquire a smarter company).

    The point which most folks still miss today about the attraction of video on the net – its about the user control of both content production and delivery. While Viacom and the media cartel can put up their best offense, Google remains well-positioned with the YouTube acquisition.

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