AnchorDesk

The five ways YouTube is blowing it

Make no mistake, my friends: YouTube is blowing it. The belle of the Web 2.0 ball is frittering away its dominance through a series of strategic mistakes, failed diplomatic efforts, and all-too-typical Google-imbued arrogance. OK, maybe the arrogance was there to start with, but you can take this much to the bank: YouTube is about to become a $1.65 billion tax write-off.

I'm surprised to find myself in this camp. When Google first bought YouTube, I really did think the search giant would make back its money, striking content deals with ease and implementing what I was sure was a master plan to make all those little video-watching eyeballs pay off. Unfortunately, here's how Google's plan for deal-making has presented itself thus far:

• Use YouTube's popularity and influence as a club to push for long deals that don't pay media companies nearly enough to allay their intense paranoia about online distribution.
  
  
• Delay--or at least fail to communicate about--rollout of filtering technology that would reassure that paranoia with even meager proof that it's possible to keep people from mass-uploading copyrighted clips.
  
  
• Turn around and use that very technology as a way to blackmail the content companies back to the table. YouTube and Google came out saying they would make the filtering technology available only to its partner content companies, leaving everyone else in the copyright-infringement wilds. After an instant backfire that they really should have seen coming, they're now promising filtering for all...uh, eventually. Bad move, Google.
  
  
• Glibly announce that any company that doesn't want its entire catalog available ad-free on YouTube just doesn't get it, man. In response to Viacom's demands--after failed talks--that YouTube take down 100,000 Viacom videos, YouTube sadly shook its metaphorical head at those silly big-media folks: "It's unfortunate that Viacom will no longer be able to benefit from YouTube's passionate audience, which has helped to promote many of Viacom's shows." I'm sure they just love hearing how stupid they are.
  
  
• Get Google CEO Eric Schmidt quoted in the Wall Street Journal saying this about working out some big TV deals: "I'm not in a great hurry on this issue. It's more important to get it right."
  
  

Actually, Mr. Schmidt, I think you're running out of time. I'm not saying the media companies are being completely reasonable. In fact, they're probably being difficult, paranoid, fusty, old-fashioned, and maybe even a little greedy. And I know it's hard to roll out truly effective filtering technology--heck, I will concede that it might be impossible. But you're going to have to suck it up and make some concessions for one simple reason: you need to start making some money on this investment before somebody else comes in and takes the YouTube crown away.

Viacom's deal with Joost means two things. First, a major media property has decided it doesn't need the YouTube headaches anymore and has publicly said that the "passionate audience" just isn't worth the trouble. Ouch. Second, Joost--which was already looking pretty formidable--now has major momentum coming out of the starting gate. Other major media properties, which are rumored to be looking to some sort of joint-resource YouTube alternative anyway, might also be looking to leave the whole messy, uncomfortable, pushy YouTube thing behind, too. The only reason we all end up at YouTube is because YouTube has everything. If somebody else ends up having everything, we'll go there instead. Loyalty only lasts until the show is over.

I have no doubt that YouTube has a long and happy future as a purveyor of home-made Web clips and viral video. And I'm sure Google can work some ad magic and monetize the heck out of it, with only a nominal falloff in audience as a result (no one really loves pre-roll banner ads, or that weird Paris Hilton stunt, but people will put up with a fair amount of it to get to their talking cats). But there's only one way to turn YouTube into the kind of cash-cow that the $1.65 billion price tag demands: find some humility, get your butts back to the table, and get some deals done.