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The Value of a Brand: YouTube.com

A lot of people have been talking and writing about the recent purchase of Youtube for $1.3 Billion – yes, that’s with a “B.” But what did they actually get for their money? Yes, it’s the number one video downloading site, and this past summer, it actually past network television for downloaders vs. viewers. But the site also has some things that don’t work so well, and after all, they don’t bring in a penny – yet.

Lee Gomes, writing in today’s Wall Street Journal, sees trouble for media companies who don’t “get” what’s happening at Youtube:

“A better long-term approach for media companies might be to get their viewers out of the recently acquired habit of going to a third party, like YouTube, for their entertainment. Instead, viewers like me should have as their first impulse to check the show’s Web site, where our visit can be monetized via advertising just as though we had watched the program on “real” TV.

Getting viewers into that habit means taking video streaming more seriously than many media companies now seem to. YouTube walked the walk with Web videos, spending a considerable amount of time and money on servers and bandwidth to quickly show users their requested videos, though the quality of the image still left much to be desired. By contrast, the video on the Web sites for many media companies seems to be just a pretty ornament that doesn’t function particularly well, because the media companies don’t seem to have the incentive to make it work.

No wonder people prefer YouTube.”

Ultimately, it isn’t about technology. Gomes continues:

“With YouTube, though, the company isn’t getting any technology to speak of; in fact, YouTube users will probably notice an improvement in coming months in some of the secondary parts of the site, like mail and messaging, which were known for their occasional hiccups and downright outages.”

The value, Gomes insists is in the brand name. The value of the brand relationship that Youtube has created with its audience is remarkable. Just like “Google” has become a verb – you don’t “search” anymore, you “google,” Youtube is becoming the same to video downloading.

What’s the value of your brand? Whether you’re trying to become known personally, sell a product, or promote an organization, the value of the brand is far greater than the product itself, what you actually do, or what you’ve accomplished.

Never underestimate the power or the value of a strong brand.

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4 Comments

  1. I'm wondering how they propose to make $ off of youtube? The allure is that it's free and you can get many videos on youtube for free that you have to pay for elsewere…same with myspace-google video is no fun-it's already too regulated.

    If they stop the free aspect I think people will just turn to another free video site. Nothing beats free…who would pay for a download or monthly fee? If your going to pay usually you want quality which means cable tv or satellite right?

  2. A few comments

    re: valuation of the deal

    In August of this year, Google guaranteed News Corp at least $900 Million in ad revenue sharing for the rights to place ads in the News Corps. properties, the largest being MySpace. People thought Rupert Murdoch was crazy to pay $550 Million for My Space, but that looks like a bargain now.

    Google's ad revenue model is all about relevance; i.e. getting the right ad to the right person just as they're searching for it. The categorization, search and keywording of video in YouTube is a perfect compliment to Google’s business model. While the "brand value" of YouTube is good, I think the core benefit for Google is that YouTube is a great platform for targeted ad delivery.

    re: YouTube's impact of web-video

    I believe the most significant long-term impact of YouTube is that they have created an expectation that on-line video should be plentiful and free. This coincides with the continued drop in storage and bandwidth costs and has set the stage for an explosion in video content. How do you make mass appeal pay-per-view or subscription based sites work when the expectation is that video should be free? Is it a coincidence that ABC, NBC, CBS and FOX have all started offering free streaming versions of their prime-time shows this fall??

  3. I think you've hit on a HUGE issue.  We're raised a generation of people that EXPECT their media to be free – youtube, napster, etc…  As faith based media professionals, how can we compete for the hearts and minds of a culture that expects everything for free?  It will take some innovative funding strategies for sure….

  4. Phil, you and I must get our information from different sources. As I recall, RedEye (a free newspaper published by the Chicago Tribune) said that the actual selling price for YouTube was 1.67 billion dollars. But regardless of what the final figure was, that's a lot of money! Especially when you consider that YouTube itself had fewer than 70 employees prior to the buyout.

    There's no question that major broadcasters and cable TV companies could learn a lot about the recent success of YouTube. The question is, what does that success mean? I think some people, including Lee Gomes, may be drawing erroneous conclusions.

    I think that the real significance of YouTube has less to do with the importance of a good brand name (although I don't deny that importance) than it has to do with the fact that it represents the democratization of video distribution to a wide audience.

    After all, the brand name "YouTube" meant nothing at one time. (I'd never even heard of the company this time last year.) The name only acquired its potency because the company successfully tapped into a common feeling among people, which was the feeling that major broadcasting and satellite companies had too much of a stranglehold on video communications.

    Thanks to YouTube, any goofball with a video camera can now distribute his or her creations for all to see. YouTube is to video what blogs are to traditional journalism and what podcasts are to traditional radio.

    If TV networks can demonstrate a real commitment to empowering ordinary people to use the new technologies in order to communicate with others, I think that such companies can benefit significantly from the new market which YouTube represents. If not, they'd better start writing their own obituaries. (I'm speaking metaphorically, of course!)

    If TV networks respond by embracing the YouTube model on their websites, I suspect that it will benefit their regular programming as well, since it will enable them to get a better feel for the type of content people really want to see on TV. Not that there isn't still a need for traditional TV programming, but there's no question that regular TV networks and cable companies could do a much better job of empowering ordinary individuals by giving those individuals more of a voice.

    The extent to which most TV content disproportionately represents certain geographic regions of the country (especially New York and L.A.) has always smacked of elitist provincialism. When people from the Midwest and the Bible Belt have as much chance of showing up on national TV as people from areas primarily known for their political liberalism, then maybe committed Christians and political conservatives will feel less disenfranchised from mainstream culture.

    Will that be the result of the success of the new YouTube model? That's hard to say, but it certainly seems like a possibility.

    Mark W. Pettigrew

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