Technology Futures

After days of rumors, Google has confirmed that it has paid $1.6 billion for YouTube, a tiny video startup that has never made a cent and that has only 67 employees. What is Google buying? In a word, eyeballs. Google's own video venture has been a huge flop, so the company had just two choices: abandon the lucrative advertising potential of free video, or buy the market, which is basically YouTube.

In just a couple of years, YouTube has become a cultural phenomenon and a political force, along with being a huge time waster and a terrible drag on office productivity. Instead of standing around the water cooler talking about what was on TV last night, office workers talk about what is on YouTube, then go right back to their cubicles and watch instead of working, and driving up the company's cost of bandwidth at the same time.

Google is looking more and more like Microsoft. Like Microsoft, they were not the first with a product (Apple introduced windows to computers before MS), but like Microsoft, they were able to capture a big chunk of the market through good marketing. Windows has consistently lagged behind competitors in terms of quality and features, just as Google's search is also long in the tooth. And like Microsoft, the company has had more hits than misses; Google's social software has flopped along with it's video. So the company now has to buy innovation from others. That has rarely worked well for Microsoft, which has lost billions in acquisitions of brilliant software that then quickly disappeared.

YouTube is not likely to disappear, but the transition to becoming part of the Google empire will open up opportunities for video competitors to gain marketshare. And in the search market, competitors are becoming more aggressive; last night, I saw a very hard-hitting Ask.com ad on TV. Google could fall even more quickly than it has risen, as ad dollars can be redirected with a few mouse clicks.

A woman trying to sell shampoo on eBay has been told she cannot do so. She is apparently buying hair care products from a store or wholesaler and then selling the products on eBay, but the hair care firm Aquage says, "No." The firm is using the flimiest of pretexts, claiming copyright infringement because the woman took a picture of the shampoo and posted it as part of the eBay listing. They also claim she has violated distributor agreements, even though she has never signed any such agreements.

This is first cousin to the often absurd requirements that the entertainment industry has been trying to impose on digital media like music and videos. Except in this case, we are talking about a real, physical product (a bottle of shampoo). The company seems to be trying to assert that the woman, even though she bought and paid for the product, has to get permission from the company before she can resell it to someone else.

Companies that try to assert continuing "rights" over products that they sell are not, in my opinion, going to prosper over the long term. Pursuing such legal strategies suggests that the company's products are overpriced, that the firm has antiquated distribution strategies, and/or that the firm thinks it is a good idea to alienate customers by suing them.

It is no accident that the iPod and the iTunes Store has captured the majority of the market for online music. Most competitors have tried "rent the music" schemes that don't let music lovers own the music that they pay for. Apple, on the other hand, developed a system that provides some digital rights management but in a way that assures that when you buy a song, you really do own it, instead of just being allowed to listen to it for a while. It's a simple concept, really, but one that seems to escape many companies.

The recent uproars--one at Hewlett-Packard over obtaining phone records illegally and the other with the instant messaging Congressman--are a sober reminder that almost everything we do leaves tracks these days. In both of these cases, someone other than the intended recipient of the electronic records ended up with the information, legally or illegally.

There are several implications. One is that we had all better understand the technology we are using before we use it. As obvious as this sounds, the Congressman probably thought his IM text was disappearing as soon as the conversation was over. But it wasn't.

Even the telephone is changing. While the old-fashioned phone system records what time calls were made and to whom, it does not record the call itself. While anyone can do that, it requires a lot of fussing with wires and recorders. But the new software-based VoIP systems will happily record phone conversations on your hard drive with the click of your mouse.

What does this mean? It means face to face meetings are not likely to go out of style entirely, for all sorts of good and bad reasons. And I think that is a good thing.

Network backup services are going to become big business, as everyone--businesses and consumers alike, figure out it is cheaper and easier to pay someone to store all your stuff. And the stuff is growing like crazy, as we buy songs online, download videos, and put thousands of digital pictures on our hard drives.

For purchased content like music and videos, you really should not have to back that stuff up; instead, the sellers should provide dead simple ways to re-download content you have already paid for, and as we buy more and more stuff online, it will become a business necessity to offer that service.

I recently bought some digital images for a new brochure, and accidentally deleted them. The firm I bought them from sent me replacements, but it took several days and I got a scolding email from them about how I should be more careful. Why on earth would a company scold a paying customer? It's just bad business, and that kind of attitude will slowly go away.

But content we create ourselves--years of email, family pictures, home videos, and other kinds of nonreplaceable data--needs more secure storage, and it really needs to be off site. What a lot of people are doing now is buying a cheap external hard drive and making a copy of everything there. That is good only to a point--that won't protect you against floods, fire, or burglary. And businesses have similar problems, as nearly all business data--customer information, product data, brochures, presentations, etc.--are in digital format.

Some people are using "free" services like Google Gmail to back some stuff up, but these free services have low quality of service compared to paid services, and they are not that expensive any more. FileBanc is a company that offers both consumer and business backup services, and Data Ensure is another firm that markets to businesses.