"The old guard flexes its muscle (while it still can)."
Why is network television endangered? Siklos offers the now clichéd “worry” that Google will soon rule the world’s advertising:
The worry widened to include the titans of television and cable programming after Google’s buyout of YouTube late last year. The buyout raised the possibility that Google would extend that advertising dominance into video — a business that is exploding online and for which advertisers already spend some $60 billion on conventional television.
Siklos neglects one multi billion dollar reality, however: The attraction, scarcity and power of “old guard” expensive to produce entertainment that is in high demand.
In “Google’s YouTube: Who are the broadcasters? I underscore how Google knows that to recoup its $1.65 “broadcast yourself” investment, it must obtain the lucrative, professionally broadcast, copyright protected by corporate counsel, video content owned by television networks and movie studios.
In “Who needs Google? CBS vs. Viacom vs. NBC” I present in detail the diverse television network strategies aimed at ensuring that Google shareholders will not be the only ones profiting from their proprietary content assets.
Google is loath to spend a penny on content.
Google’s $150 billion market cap genius does not stem from a search algorithm or advertising auction scheme. The Google magic is an uncanny ability to proceed undeterred via a Google-centric media business model that commercially exploits content produced by others, but does not compensate the content producers or owners for the Google for-profit use of their content.
The ramifications of Google’s search dominance permeate the Web’s ecosystem: Google is a factor in the success or failure of virtually every Website. How has Google amassed such power, and commensurate wealth, in a very short period of time? Does Google rule due to superior technology, an unbeatable value proposition, monopolistic lock-in? No, no, no!
Google’s secret weapon is a four letter word: SPIN! At Google, Webmaster is trumped by Spin Master.
The Google spin machine results in popular, and professional, perception that any non-capitulation to Google must be “posturing” or “negotiating,” with the end-game inevitably to squeeze a “better” deal from Google.
Siklos on why networks pursing their legal mandates to maximize shareholder value via optimization of resource deployment is mere masquerading before Google’s preordained supremacy:
It is hard not to conclude that the media establishment’s threats to start its own rival to YouTube — as well as Viacom’s yanking of its popular clips from the site — amount to posturing. What it might really be about is securing a lucrative deal from Google that would end hostilities in exchange for guaranteed cash and a healthy split of revenue from any advertising the company derives from their video content.
Contrary to Siklos’ contentions, it is hard not to conclude that standard operating procedures—legal action against copyright infringement, strategic competitive entry into new markets, licensing of content use—amount to sound business practices.
It is Google that is flexing its $150 billion market cap muscle, while it still can.