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Google and YouTube - Top 3 hurdles and Top 3 opportunities

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Ever since the recent acquisition of YouTube by Google we have been reading several articles of options in front of Google to monetize and have the $1.6Bn it paid for the acquisition pay off.

In my belief the road towards monetizing the YouTube acquisition would be a tough one - The top 3 hurdles I see which have to be overcome,

1. The kind of content that goes into YouTube is not always legal and readily monetizable. The content might already be copyrighted by other content producers and Google might get drawn into several disputes and fights about the veracity of the content it is trying to monetize in the first place. In summary, Google seems to have a big big problem on the supply side with content on YouTube

2. In all the ventures that Google has had so far - GMail , Google Finance , GTalk , Google Earth , Google Documents the content which goes on it is not under the direct responsibility of Google. Also, the content there is not available for public view and what users do is totally left to them. Probably, Picasa is the one application I can think of where user generated content is available for public consumption, but I never think that Picasa will become a main stream application for sharing pictures. So with YouTube, I think that Google is for the first time faced with a problem where it needs to own up responsibility of both the content that goes in and what is probably already there although it is user generated content. How this is handled is something that I would like to wait and see.

3. Google has no doubt been the undisputed leader in text search, and Google Adsense has been a tremendous success in generating revenue for both the advertisers and people who carry the advertisements on their web pages. But does Google have a viable model to monetize the video clips in the same efficient manner that it has with text search. If I were to translate it directly, I should probably be able to place ads relevant to the content on the video - is the technology to do this available if yes is it with Google - and can it put it into play?

Nevertheless, I am a great believer of the strength of Google at making things work and assuming that they overcome the 3 hurdles above, the following are my assessment of the top 3 opportunities

1. Needless to say one of the most attractive options in front of Google is probably to make the YouTube content available on mobile phones. With mobile TV already being considered I dont see any reason why Google will not be already considering this.

2. Are all the TV broadcasters happy with the routes they have to distribute content they generate. I dont think so. Would they have the strength and willpower to just ignore the 100+ million users of YouTube. In my belief, Google can easily work out a revenue sharing mechanism to help them get the viewership of its large user base and possible trade this for a rights to use their content.

3. If Google is able to get over hurdle 3, the biggest opportunity is to generate revenue by placing ads based on content in the video's that users are viewing and extent the usability of Adsense.

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