Teaching Yourself To Think
“nobody in their right mind would hold back making revenue if it were available.” – comment on TechCrunch
There are two reactions to that comment. It either makes complete sense or you can’t even comprehend someone believing it. If a company’s goal is to make money, why would they ever turn it down? Well that’s like saying that no general would ever withdraw when they could advance. Why would they ever not take territory? A quick look at history shows us that they do that all the time:
Pericles in the Black Sea. Stonewall Jackson at Shenandoah. Themistocles at Salamis.[1] In some cases it’s even got it’s own name, Tactical Retreat
Smart companies, like smart generals, know that money is just money unless it has strategic value. You can get revenue anywhere, especially an innovative place like Google. So that’s not the question. It’s “what does this revenue bring me and am I better off for it?” If it doesn’t have strategic value, then it’s not worth going after.
It’s really easy to latch on to aphorisms or take for granted commonly traded assumptions. Getting yourself to the point where you can think strategically – deeply and counter intuitively – is difficult. It takes a lot of work. It would be easier if things fit in nice little logical boxes but they don’t. There’s this messy middle ground between ignorance and critical thinking that’s discouraging to navigate.
Ultimately, though that’s YOUR JOB. And if you don’t do it, if you don’t want to, then don’t expect the benefits.
[1] Pericles and Stonewall examples from 48 Laws of Power Law 47 (pg 416) and Law 17 (pg 127) respectively.
What is available? Is “available” what’s immediately in hands, or is “available” something that you can take with little negative consequences? I think of “available” as the latter… Is that a sign I’m already thinking?
Sorry if this is stupid. I’m highly insecure of asking questions, I’m just doing it right now because I’m on my 5th drink, heh.
The person’s point is that if Google could monetize YouTube more, they would. Which is a profoundly ignorant thing to say. There are hundreds of ways that Google from profit from any number of their properties that they purposely and emphatically refrain from doing.
On the other side of the spectrum, a person who believed this comment would likely think “nobody in their right mind would not minimize costs if they were able to” as well, which is also precisely wrong. This is why so many government-run businesses are so much less efficient than private businesses. When your sole motivation is profit, you find ways to be innovative. But when you are part of a much larger structure, deriving funds from other sources, there is less pressure to keep those costs down.
On another point, google could profit by say, sticking ads in before the videos, but the question is, would they profit in the long run? Youtube is made for people who want instant viewing, and who’s to say viewers wouldn’t immediately run off to another site once this started happening. This strategy may work for TV networks and such, but when someone wants to watch a 9-second-clip of a car-crash they’re not going to wait for that ad.
The question is, can you monetize youtube in the long run? I don’t think you can. I feel the same way towards Facebook. Granted, I don’t know much about all the schemes there are for monetization, but they are all somewhat intrusive to get the clicks, and would have to be much more prevalent than what they are now. And once people get pissed off, there are 10 more networking sites to jump right to,
I wouldn’t even say this works for TV networks. Look at the shit TBS is doing. I love Family Guy. While I’m watching it, they freeze Family Guy, and have Bill Engvall show up to talk about his TV show.
Yes, they might somehow attract a couple extra viewers to Engvall’s show, but all they’re really doing is just pissing people off. In the long run, the shit they’re pulling now is only going to alienate their viewers (they’ve already lost one).
Compare Google’s DNA with that of TBS. It’s easy to see who has the better strategic vision. It’s like what Umair says, evil won’t work anymore.
To clarify, I meant TV networks in the sense of them making shows available online. For example, ABC offers almost all episodes of Lost online. You’re forced to watch a few video ads, but you don’t mind because you’re getting to view 43 minutes of content in high-definition, not a 15-second youtube clip of someone getting kicked in the face.
The original concept from TechCrunch makes sense if you replace ‘Revenue’ with ‘Profit’ and makes perfect sense if you replace ‘Profit’ with ‘Maximum Marginal Utility’.
As a side note, the suggestion that YouTube has not been monetized is ludicrous. Google make buckets of money from their ownership of YouTube. They didn’t spend 1.65bn on the product because they thought we should all have free video – they saw an opportunity to rake in cash by the bucket, and acquired the product for that purpose.
The core idea that has driven Google’s success, Alberta’s housing crisis, and Facebook’s profitability is the notion that an entity can make money by providing a service to consumers – without taking money from the consumer.
This isn’t a failure to monetize, this is a staggering success at monetization of something that people won’t pay for.
B2B revenue streams from B2C businesses are the future of the media industry. The model shift of revenue sourcing for B2C businesses is probably more important to the media and IT industries then any other single business change in our lifetimes. From a business perspective – this change in model is the primary reason why theres money in the internet.
http://www.blogmaverick.com/2008/06/16/hulu-is-kicking-youtubes-ass/
In the interest of fairness, Cuban raises a fair point that Youtube while monetized, isn’t currently profitable.
I generally disagree with Cuban just because I don’t like him, and I think Hulu and YouTube have sufficiently dissimilar models that smug rants towards google fanboys are obnoxious and stupid – but his criticisms of youtube’s model are interesting.