Google Buys YouTube

That's the headline - "Google Buys YouTube!"

I admit that I can see the synergies; however, I must add that I felt YouTube was more valuable to a media company than an advertising company. After all, YouTube would have allowed the media companies another 'free' venue to push their old and popular content while building an independent advertising model. That plan describes why Newscorp (NWS.A) bought MySpace - leverage their existing media portfolio to sell ad space... something that TV and radio have done for years.

Google (GOOG), with its purchase, now enters the room from the other side. Already having a booming advertising business, but lacking the content. Ironically, YouTube lacks content too since it only recently started to forge agreements with the media companies - aka copyright holders.

Honestly, how does Google intend to make money off of this deal? After all, it will have to pay some sort of licensing fee to the media companies. Does Google honestly believe that they can charge future users to view YouTube content? Do they believe that ads alone will generate enough revenue to pay the YouTube media licenses and other operating costs?

I think the true answer lies in the field of Cisco (CSCO) and BP (BP). Both companies buy companies who are viewed as competition instead of buying companies whose assets could provide an immediate and long term boost to the bottom line. Then they hold the companies, strangle out the value, and eventually release it back to the world. In other words, basically, I believe that Google bought YouTube to shut it down. Maybe not completely... but I look for YouTube to stagnate until Google believes it can re-brand it and own the market.

I still have visions of the nightmare known as AOL-TimeWarner (TWX)... at least TimeWarner OWNED the media portfolio!

Microsoft's Zune will Kill Apple's iPod

Yes, let the flame war begin! I am sure the zealots will respond critically. After all, no one can ever improve on the APPLE design.

Whatever...

First, watch this:
Click to see a video demonstrating the soon to be recently Zune.

Second, understand what this means:
Microsoft is attempting to capitalize on the social networks aspect of their future users. Will it work? Depends on how intrusive the Digital Rights Management is. However, only DRM-protected files have DRM! Essentially, you should be able to share any type of media betweeen Zunes. I can see two immediate implications.

1) Going to a concert or even a restaurant with a band will become a vastly more interesting time. Why? Well, I am sure that someone will come up with a centralized share-to-the-room feature. How would it work? You find out that a band is playing at your local bar/restaurant. Nothing new. But you and your friends are carrying your Zunes. Periodically, let's say every 30 minutes, the band's 'share feature' broadcasts to the entire room of Zunes - "Do you want to download Sloppy Joe's song/cd?" Basically, it's push advertising for small bands. No more need to push self-made CD releases at the bar. JUST BRING YOUR ZUNE!

2) The pervert market. That's right! Just like the Internet which has seen most of its development funded by the military and porn, Zune will likely benefit the same way. No, it's not about trading legal XXX content. It's about the freaky-freaks out there. Imagine: Again, you're at a bar, you have your Zune 'socially-enabled' so that other Zune's can see you. Pop... "Want to see a picture?" Oh, how interesting. You look around to see who may be sending it. You download the pic and you like what you see - except it's kiddie porn... or gay porn ... or biker porn because you're in a gay-biker-kiddie porn bar. "Oh, they don't exist!" HA, sure. Just click to see the Google results for "gay bear." I guarantee you that the Zune will spread through these fringe groups quickly.

Synthesis:
So, you have the young-MySpacers, the mainstreamers, and the fringe all carrying around the same device for the same reasons: quickly and almost invisibly capitalize on the social networking function to share vast amounts of media. Can you imagine a school cafeteria full of these? "Want to see my ex-girlfriend?" takes on entirely new and instantly destructive realities.
And guess what? Any and all negative hype will propel the Zune just like it has done for MySpace - the fastest growing, most commericialized social networking experiment in hystery. If the Zune can do for MS what the iPod did for Apple, I would suggest buying Microsoft stock (MSFT) now.