More Problems For YouTube


I don't care much for YouTube because most of the videos on the site are random senseless junk that only a high school kid can appreciate. I do visit from time to time, to search for interesting stuff, (like the video clip below about Google), but I expect that type of content will soon go away as more content producers follow Viacom's lead and request removal of their videos. Viacom emailed a statement to Techcrunch explaining the position.

After months of ongoing discussions with YouTube and Google, it has become clear that YouTube is unwilling to come to a fair market agreement that would make Viacom content available to YouTube users. Filtering tools promised repeatedly by YouTube and Google have not been put in place, and they continue to host and stream vast amounts of unauthorized video. YouTube and Google retain all of the revenue generated from this practice, without extending fair compensation to the people who have expended all of the effort and cost to create it. The recent addition of YouTube-served content to Google Video Search simply compounds this issue.

Virtually every other distributor has acknowledged the fair value of entertainment content and has taken deliberate steps to concluding agreements with content providers.

Mark Cuban has thoughts on GooTube, as does Dealbreaker.

The interesting question here is whether removal of video clips will hit Google's bottom line. As I understand it, a stock swap deal like Google-Youtube doesn't require regular amortization of goodwill, but instead requires periodic re-evaluation of goodwill to determine if there was an impairment. If so, the charge will flow through the income statement. But how does Google determine goodwill impairment for a site like YouTube? Is the valuation based on traffic, content, or some combination? It seems like removing all of the Viacom videos would decrease the value, but if it doesn't decrease the traffic, does Google care?

I may be wrong about the accounting treatment of the deal. If any accountants out there want to weigh in, please do so. The SEC filing of the Google-Youtube merger agreement can be found here.

  • Are they (Google) selling advertising on the site for each individual video? Then isn’t it like a music radio station. Stations pay a fee (based on revenues and market size) and get a “license” to play hot songs. And I think that if a song is really popular the owners of the song get a bigger cut of the license fees. Why wouldn’t that work for YouTube?

  • Rob

    It will, and I expect them to do something like that. But they will still have the issue of whether or not content providers want their content there.

  • HST

    “I don’t care much for YouTube because most of the videos on the site are random senseless junk that only a high school kid can appreciate.”

    Well avoid those videos and avoid stereotyping a generation while you’re at it.