The recent acquisition of YouTube by Google for US$1.65 billion in stock has sent shockwaves through the internet community. It was the latest step by Google to capitalise on the influx of money from going public to continue to expand this new media empire. Google’s acquisition of other companies has increased greatly since it became a public company.
YouTube is the best-known and most expensive of these acquisitions. This is a popular video sharing site that allows people to make short videos with a web camera and upload them for others to view. It has featured series of videos such as LonelyGirl15 and Ask A Ninja. YouTube currently has the 9th most traffic on the internet.
The acquisition of YouTube will complement Google’s existing video search service. YouTube and Google are both big components of what has been dubbed "Web 2.0", the next generation of internet services. Like Google, YouTube’s source of revenue is advertising.
Competitors of Google have been worried about this acquisition because Google is already the premier web search service, has one of the top free blogging websites, has a leading e-mail service (Gmail), and now has the most trafficked video sharing site. This puts Google far ahead of the competition and puts them in almost a controlling (if not monopolistic) position as far as online advertising is concerned.
The state of online advertising
Google’s AdWords and AdSense are the clear leaders in the online advertising market. AdWords allows business to purchase "key words" so when a potential customer searches for that word or views a webpage that is relevant to that word, they will see an ad from that business. AdSense allows webmasters to place "ad boxes" on their websites and get a portion of the revenue that Google earns when surfers click on those ads. The display of "content relevant" ads has lead to a big boost in Google’s perceived worth.
The problem with "pay per click" ads is the potential for abuse. Pay per click ads are those ads which Google gets paid for only when a web surfers clicks on the ad. Webmasters who wanted to artificially increase their revenue have found ways to "generate" clicks so that they will get paid more. This practice is called click fraud and has lead Google to invest a significant amount of time to solving the problem. An entire industry has developed around the practice of increasing clicks on Google ads and advertisers have caught on to this problem. There are also computer viruses and spyware that are designed to make victim computers "click" on these ads so that hackers earn more money from Google. There are also many "fake" sites out there that simply repeat free content from other places to try to target certain higher-paying keywords to inflate revenue. However, these sites have no real unique content and often use other methods to artificially increase their number of surfers and artificially increase the number of clicks they receive.
The acquisition of YouTube will help with this problem, albeit only for a short time. Google is facing a variety of lawsuits because of click fraud and video advertising is a way to get out ahead of the click fraud problem. With an advertisement in a video there is nothing to click. However, it is naïve to think that there is no artificial inflation of viewership.
When traditional TV or a cable channel sells advertising, the price is largely determined by the number of viewers. Due to the technical difficulty in inflating that count (one can’t exactly take a million TVs and turn them on to the same channel), the numbers are fairly honest. For television, there is an independent media research company, Nielsen, that provides the authoritative number of viewers. No such service exists in the online world.
The internet is already prone to promotion of less-than-truthful content. Social networking sites are known to have problems with artificially increased promotion of content. This problem is not new to YouTube where people will cheat the system to artificially increase the number of viewers of movies so that a particular video will show up as "most popular." With producers of movies having a financial incentive (and not just mere vanity) to increase their viewers so that they make more money from Google, these practices will become even more commonplace. The software to audit the number of viewers of online movies (or the number of legitimate clicks to ads) has not been adequately developed.
In the case of YouTube, this will likely result in an increasing amount of fake videos that get artificially promoted. Blogging began with individuals either doing "citizen journalism" or simply writing online diaries to be heard. As the number of blogs increased, the number of "spam blogs" or splogs increased with it. Spam blogs are those that have fake or reproduced content for the purpose of making money artificially with techniques like click fraud. Now it is arguable that there are more splogs than there are real blogs.
The result is that the quality of blogging, in general, has gone down. Many blogs are simply just complete copies of other articles available elsewhere. Serious blogs with good and unique content get drowned out in the noise of no-content splogs. This will likely happen to YouTube because the incentive will move from developing good and enjoyable content to putting "something" up and just using tools to artificially increase viewership.
There has been much controversy around allegations of censorship by Google. Google has already agreed to censor content to Chinese viewers, there is also censorship accusations based on ideology. Some conservative bloggers and news outlets have accused Google of removing their content from their news service based on ideological grounds. With Google handling about 50 per cent of all searches and being one of the most trafficked sites on the web, being removed from Google can be a death knell for a website.
Google, as a company leans over-whelmingly left: 98 per cent of all donations from Google employees went to the Democratic Party. Google News uses the "hate speech" criteria to determine whether a site should be removed or not. YouTube has also shown a tendency to lean left in removing Michelle Malkin’s videos from YouTube’s public service for similar reasons.
This has lead to legitimate questions as to whether Google will use its position to slant its services to promote left-wing causes. With Google’s increasing dominance, which could be used to control or at least influence all that people see on the web, the acquisition of YouTube is another concerning development.
Part of Web 2.0’s success was that it allowed for individuals to express themselves and their ideas in an environment where the so-called mainstream media is not presenting an adequate variety of content. Much of the left-wing complaints about the "new media" has been that it presents more right-wing biased content which would never be aired on the nightly news. The concern is that Google will use its position to reassert the left-wing dominance of the mainstream media over the internet. Michelle Malkin, for instance, founded HotAir as a direct response to the censorship she faced from both Google and YouTube.
The acquisition of Google and YouTube, and the ongoing development of Web 2.0, is nevertheless exciting news in the emerging online media market. Like the dot-com era of the 90s, Web 2.0 ushers in an era of rapid development of technology. The new variety of content (both video and blogs) has enriched the political debate and entertainment industry. It has also come with consequences, such as the various attack blogs that cheapen the political debate.
The question now is: will Web 2.0 end up as another dot-com bust? Time will tell.
John Bambenek is, among other things, a weekly columnist for the Daily Illini. He also writes for his own blog, Part-Time Pundit, as well as contributes to six other popular blogsites the likes of Blogcritics.