It’s a puzzling one. Doom-mongers have been quick to denounce Google’s acquisition of quirky video hosting/posting site YouTube as evidence of ‘dot.com Mk.2’ at work. Superficially, this would seem to be the case: paying US$1.65bn for a company that has yet to make money, prefers instead to lose it and has no visible means of viable commercial support, seems crazy. Google is also financing the deal through it own shares, rather than what the rest of us refer to as ‘cash’, which adds to the sort of inflationary spiral which no self-respecting technology bubble can do without.

To these eyes, the latter is more reprehensible. Danger: ‘scrip at work’.

Clearly, if oddly for one of the most ubiquitous and well-used gateways to the Web, Google is buying a chunk of Internet presence. In turn, it will attempt to commercialise this through licensing and advertising tie-ins. This is a legitimate (if by no means guaranteed to succeed) tactic and, for a company awash with riches, a logical one.

Thus arriving at a valuation for YouTube is unlikely to have troubled Google’s founders (although the company’s recently-minted army of shareholders may take a slightly different view) and certainly will not trouble the creators of YouTube. The latter have realised a significant payback on less than two years of work – and good luck to them.

Clip joint
One echo of the worst excesses of dot.commery can be detected in the language employed by the happy participants in the deal. Now where did I put the sick bag?

"Our community has played a vital role in changing the way that people consume media, creating a new clip culture. By joining forces with Google, we can benefit from its global reach and technology leadership to deliver a more comprehensive entertainment experience for our users and to create new opportunities for our partners," said Chad Hurley, CEO and Co-Founder of YouTube.  "I'm confident that with this partnership we'll have the flexibility and resources needed to pursue our goal of building the next-generation platform for serving media worldwide."

Google is just as effusive. "The YouTube team has built an exciting and powerful media platform that complements Google's mission to organize the world's information and make it universally accessible and useful," said Eric Schmidt, the company’s CEO. "Our companies share similar values; we both always put our users first and are committed to innovating to improve their experience. Together, we are natural partners to offer a compelling media entertainment service to users, content owners and advertisers."

The latter sentiments will doubtless have Chinese users dancing in the streets at the notion of a “universally accessible and useful” information society. Assuming, that is, that Google allows the news of its latest acquisition to filter through its Beijing-backed filters in that part of the world. Of course, for Sergey Brin and Larry Page, the Harold and Maude of the online world, that’s little more than trivial and irrelevant detail.

Napster with pictures
Google may find it harder to cope with other aspects of the ‘small print’ that hounds YouTube. Just as legal uncertainties have tailed the rise of online gambling sites and may yet burst that profitable little Mk.2 dot.com bubble, so YouTube stands accused in some quarters of playing fast and loose with copyright law. Some content owners regard YouTube as little more than ‘Napster with pictures’ and Google’s professed aim of taking the service ‘legit’.

Whence then its appeal? It reminds me of a superior pop band during the era of punk/New Wave music, known as the ‘Gang of Four’. On leaving their independent recording label to sign for a major record company (EMI), one fan commented; “ it’s just great: they’ve gone from signing about Armalite Rifles [one of their songs, as it happens] to working for a company that makes the bloody things.”

The cachet of counter-culture in which YouTube has draped itself may likewise suffer under the benevolent of vice-like grip of Harold and Maude. The demon duo’s certain skill in placing effective ads on top of YouTube’s existing anti-business model will simply contradict the essence of YouTube. Since the technology required to emulate YouTube is relatively cheap and easy to use, it won’t be long before genuine and unfettered alternatives rise up to fill the vacuum created when YouTube sold out.

Who knows? The YouTube template of freedom of visual expression might even be extended to China when it is re-incarnated as a subterranean force.

Old before their time
The lesson here is that, in the shrinking timescales of the Internet age, Google has completed the transition from infancy and adolescence to late middle age in less than three years. Harold and Maude and their acolytes are sitting in their counting houses, counting out their money. Perish the thought that the world that spawned them may one day soon spurn them.

To its eternal credit Google, led by Harold and Maude, survived the dot.com disaster and rose to create and monetise a quite wonderful company – even if nobody s 100% sure how it makes its money. Now it resides on the other, more respectable side of the online world. Living out counter-cultural yearnings with ‘petty cash’ acquisitions like YouTube will not extend the life expectancy of Harold, or Maude, by even a day.

Buying up neophytes won’t change that. That’s the case even if Google is now ‘big business’ (which it surely is) and YouTube is just an offbeat trinket on the corporate bracelet of lucky charms.
Jim Chalmers