Tuesday, April 10, 2007

Google more bad news to come

Looks like arrogance is not the best way to deal with old Media when you are desperate to make money on their content:

Blow from Yahoo! and Viacom:

"Larry Dignan (ZDNet) submits: The enemy of your enemy is your best pal. Just ask Viacom (NYSE: VIA - News), which is suing Google's (NasdaqGS: GOOG) YouTube for $1 billion while hopping into bed with Yahoo (NasdaqGS: YHOO).
Viacom and Yahoo announced a "multi-year partnership" where Yahoo will be the exclusive provider of sponsored search and contextual ads on all of Viacom's sites. These properties include MTV.com, VH1.com, Nickelodeon.com, comedycentral.com and BET.com and cover "33 broadband sites." Yahoo added that the deal could expand to 140 more Viacom Web sites worldwide.
Yahoo portrayed the Viacom win as a victory for its project Panama, an ad system designed to close the monetization gap with Google. Expectations are high for Yahoo's Panama and the Viacom deal is likely to push them higher.
And there were plenty of Google digs in Yahoo and Viacom's statement.
For me Henry is too much in Love with YouTube but on this one he is on the money:
"So how much TV, Radio, and Print spending would Google have to capture to, say, double its current operating profit? (Assuming no further growth of the online businesses, which obviously should continue to grow quite nicely). Google generated about $3.5 billion of operating profit last year. To generate this much from an offline TV, radio, and print placement business, assuming a generous 10% operating margin (very generous, I think), Google would have to place $35 billion of gross advertising. This compares to about $4 billion it generated from its wildly successful online ad rep/placement business, AdSense, in 2006.
The conclusion? It seems safe to say that, even if everything goes perfectly, it will be a while before Google's offline initiatives contribute significantly to the company's bottom line. "
Google is desperate with YouTube monetising: Capex is eating out margin from search and revenue still to come:
"Pop-up ads? On a Google website? It seems incredible - but it appears to be true.
In a desperate move to boost YouTube's advertising revenues, Google (GOOG) may be violating some of its most cherished, long-held principles. Beet.TV's Andy Plesser reports that a Best Western ad popped up on a YouTube page he recently visited.
Here's why this is a big deal for Google.
When Larry Page and Sergey Brin decided to allow advertising on Google, they were adamantly opposed to running the pop-up ads that used to carpet the Web, preferring instead to run simple text ads with links.
You can see some traces of this attitude in outdated Web pages on Google's site. The #1 question on Google's FAQ is "Why am I suddenly seeing pop-up ads on Google?" Google's old answer: "Google does not allow pop-up ads of any kind to appear on our site. We find them annoying."
The new answer might as well be "We paid $1.65 billion for YouTube, the whole licensing-content-from-big-media thing isn't really working out, and so we're running pop-ups."

No comments: