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One I Missed: Mary Meeker’s YouTube Math
This is a hysterically funny post from Silicon Alley Insider that is probably old news to some, but if you’re a Wall Street Journal reader like me, you never saw it the first time around: http://www.alleyinsider.com/2007/08/mary-meekers-yo.html
From the geniuses who brought you the Penn Central debacle, the Latin American debt crisis, Drexel Burnham Lambert, the S & L collapse, the fall of the Russian stock market, the dot.com crash, derivatives, hedge funds, the subprime debt crash [in progress], Bubble 2.0 [in progress] and Google’s Theory of Artists and Songwriters…
“We estimate that Google will generate $100 trillion of revenue in 2010. Or maybe $10 billion. Whatever.”
Or as she told Business Week in 2001 “…[W]e have had one heck of a feast.”
Well, that’s sort of the point, isn’t it, but exacly who’s the “we”?
Cuban on Google
For those of you who remember my panel at SXSW last year (“Can Art Survive Google?”), you will also recall the discussion we had regarding YouTube’s obvious violation of the reproduction right. You’ll also remember the head scratching regarding how YouTube’s counsel could argue that they didn’t violate the reproduction right based on a theory that the company didn’t do any copying–other than providing the technological means for users to copy videos and putting the YouTube logo on every video placed online. There are a lot of names for placing your brand in close proximity to another’s without permission, and none of those names are legal. Or–for the really stupid lawyers out there–protected by the notice and shakedown provisions of the DMCA. DM–Copyright–A. Not DM–Trademark–A. (Readers may recall my 2006 post about Google’s bad advice “Google’s Maginot Line: Will Google Wake Up to It in Time to Unwind the YouTube Deal?” Oopsie.)
Or said another way, they steal our stuff, but put their logo on it for just that added bit of insulting hubris that is the hallmark of Generation L.
Mark Cuban has a priceless blog entitled “You Tube Tries to Get Legal” in which he discusses Google’s decision to stop this extraordinarily idiotic arrogance–a must read for anyone who is trying to stay grounded in the midst of Bubble 2.0. The poor quality of the legal advice for YouTube pre-sale and Google during and post-sale is so bad that it’s downright bizarre, but someone seems to be getting the rather simple message. (Reason, could thy name be Patry?)
I’m sure that these demagoogles had some plan, some strategy–something–behind any one of a number of features that seem obviously infringing to a country lawyer from Texas who doesn’t read that mailing list whose name may not be said. It’s all so confusing for us, and we’re so lucky to have the pholks from Stanford to keep us from marrying our sisters.
But Dr. Cuban points out an interesting fact that I had actually overlooked since I just read the financial press–Google’s stock price is down 50% in four months. Cuban attributes that to the copyright infringement risk being priced into the stock, among other things.
I guess a stock price is kind of like the value of music according to Eric Schmidt. Dr. Schmidt tells us that music has no intrinsic value, it’s worth what the advertising market says it’s worth (or maybe the jury, eh, Schmitty?). And a stock price is worth what the financial markets say it’s worth. Just ask your pal Frank Quattrone, Dr. Schmidt. “‘Frank and his team bring unparalleled industry knowledge, a unique 25-year market perspective and candid, insightful judgment that CEOs greatly value on important strategic initiatives,” [Schmidt] added. “I look forward to working with him again.'”
Where is Mary Meeker when you need her? Oh, right, “Morgan Stanley analyst Mary Meeker initially projected that the YouTube ads would bring in $720 million [in 2008].” Oops.
Oh, goodie. The bubble continues. Everything old is new again.
There is a truly fascinating (and scary) article in the February 08 Harpers about bubbles–I will return to this topic soon–that I find absolutely gifted in its analysis. Think about Google, Lessig, Wired’s Hearst-like boosterism of all things Internet (especially the rampant piracy that drove broadband penetration), Cuban’s theory of the fall of Google’s stock price and then read this:
“We have learned that the industry in any given bubble must support hundreds or thousands of separate firms financed by not billions but trillions of dollars in new securities that Wall Street will create and sell. Like housing in the late 1990s, this sector of the economy must already be formed and growing even as the previous bubble deflates. For those investing in that sector, legislation guaranteeing favorable tax treatment, along with other protections and advantages for investors, should already be in place or under review. Finally, the industry must be popular, its name on the lips of government policymakers and journalists. It should be familiar to those who watch television news or read newspapers. “
From The next bubble: Priming the markets for tomorrow’s big crash by Eric Janszen
When you take the long term view, and understand the importance to the Internet economy of broadband penetration, the only thing unusual about Lessig is that the industry didn’t create more of him. They got their ubiquitous connectivity, so they don’t really need a piracy apologist around anymore, which may well explain Lessig’s sudden fascination with corruption. The first Lessig Bubble is over. Whether there will be a second is probably tied more closely to Google’s stock price than one might think. Nobody thought Cisco would trade below 20, either.
Read that Cuban blog.
Google Inducted Into the Success of Arrogance Hall of Fame
Madonna was inducted into the Rock and Roll Hall of Fame last night, televised on VH-1. VH-1 has not posted any video of the show. That would be the VH-1 owned by Viacom, also known as “plaintiff”.
Google, of course, has the footage. And websites around the Internet also have the footage because they got it from Google. That would be the Google also known as “defendant”.
Of course, it’s easy to see that the footage came from Google because it’s all packaged up with the “YouTube” logo.
This would be kind of like Frank Lucas and “Blue Magic” (see American Gangster), except even more blatant. And this Google is a public company, a company that enjoys all the riches derived from a legal securities market to profit themselves from an illegal market in other people’s property.
And these people are suing each other. Here’s the message from Google: We make the law. We do not give a [hoot] about your so-called rights. We take what we want when we want to take it and we give it to anyone else who wants to take it, too, and we BRAND IT.
A lot of people think there is a market failure in the music business. There’s no market failure. There is no market. Markets depend on laws, and there is no law that Google respects unless they are forced to do so, or they know there is a credible threat to take them down.
There is no market failure, there is a failure of the basic law enforcement mechanisms of the state, and life in this market is nasty, cold, brutish and short if you try to compete in legitimate business.
You who are Google fans are watching the success of arrogance. Be sure you know what you’re rooting for.
Marketwatch Gets It Right: Google’s Free Ride in the Press
I often say “[X] will happen the same day that the Wall Street Journal criticizes Google”…meaning never. I’m not the only one noticing. Excellent commentary from John Dvorak at Marketwatch on the subject entitled “Does Google have an Achilles’ heel? Tech giant and its weaknesses are sheltered by media.”
I have heard for quite some time that any reporter who publishes an article criticle of Google can expect their editor to get a threatening call from the Google PR department. Nowhere is this more obvious than when Eric Schmidt got his panties in a bunch over a CNET reporter “googling” Eric Schmidt and discovering pubicly
available information about Schmidt through Google. Whatever information was disclosed in that search was information the Chief No-Evil Doer wanted to be kept quiet–he banned CNet reporters from all Google facilities and events for a year (presumably all CNet reporters other than Declan McCullough, who’s wife is a Google employee and who presumably holds Google stock options under California’s community property laws). And he got away with it. Did the Wall Street Journal rush to the aid of their colleagues in the press? I guess that would violate the “Do no evil to Google” policy.
But of course, reporters saw what happened when one of their own dared to actually do some journalism rather than dutifully regurgitate the party line. You would have thought that someone in the press would have asked what was so important about the information that CNET found out to justify getting grounded for a year? Or was it as simple as Schmidt wanted it to appear? I guess we’ll never know.
The reporting on the Google version of the DMCA (the “catch us if you can” theory accepted uncritically by the Generation L journalists who cover the company), has been just this side of dreadful and often just this side of wrong. The kind of slightly wrong that throws the weight of the article to Google, but that will not be caught by anyone who hasn’t at least read the safe harbor provisions of the Copyright Act. It has largely ignored Google’s exposure in jurisdictions where no DMCA-type safe harbors exist or where no “private copy” laws obtain. This is just bad reporting. One thing that Rupert Murdoch will bring to the Wall Street Journal, one hopes, is a more balanced international view of companies like Google that are increasingly trying to change the laws upon which media companies have relied for centuries.
As Dvorak writes “…[I]s there an Achilles’ heel at Google? Many exist, but are firmly protected as long as the company is propped up by a fawning uncritical media that present the company as the darlings of Silicon Valley and some sort of bastion against the barbarians in Redmond.
It’s all image. It’s all good.”
Kind of like helping out the Chinese government, I guess.
Dvorak isn’t the only one who got this story right–CNet writer Charles Cooper summed it all up very nicely:
“For most of his tenure, Google CEO Eric Schmidt has had an easy time of it. If he’s as good a manager as his press clips claim, now he’ll have a chance to earn that reputation. History may not repeat itself exactly but if the economy slips further, a lot of companies will suffer more pain before the selling comes to an end.
Including Google.”
There was a time when nobody thought Martha Stewart would do time or that Cisco would trade below $20.
