No this is not a review of the award show. I follow music and have since I got my first records (John Denver and Glen Campbell). I love music. I love award shows. But to provide a review of the award show would not be my forte and would be a departure for me. I am, however, interested in how well it was perceived and received and what it means. The YouTube Music Awards did get free coverage on the “Today” show. More importantly the YTMA shows the convergence of entertainment and technology in a way that not only the entertainment industry makes more money but the technology industry will indirectly generate billions in revenues. In my humble opinion this is a highly entertaining way to generate more revenues for Google. Specifically more ad revenues for Google. It will also challenge the status quo of television programming as more content is delivered “over the top” versus traditional agreements with the Cable (Comcast, Cablevison etc ) providers and their content partners (Disney, ESPN, Fox, etc..).
When you think about it, it is not too hard to see how this came about. Technology and Hollywood have always had a very close relationship. When the digital revolution started to take off one of the first industries to feel the effects was the music industry. It first started with the development the compact disc, however that was pretty much business as usual for the industry. Vinyl was simply replaced by the CD. Then two things occurred. The internet and the iPod. The iPod made the playing and purchasing of music a completely different experiences. Today with 80gb iPods I can store more music than I ever could hope to own pre-iPod and internet. Then the idea of streaming video started on the internet (Remember the Real Networks video player?). Then YouTube became the place to watch music video, killing the need for MTV. I could not watch the video I want without waiting. The world of on-demand was starting and changing the face of television programming.
The YouTube music awards cater to the younger audience. This is how they consume a lot of content. New artists are introduced on the web, not on cable networking anymore. Because it is the web the artist are introduced to larger and global audiences. The Ryan Lewis and Macklemore video for the song “Thriftshop” has been viewed over 448 million times. The YTMA winner Girls Generation video has been viewed 74 million times. Justin Bieber started here. YouTube has become the place for new artists to get their name out and by-pass traditional music industry channels. It was just a matter of time before it made sense for them to have their own Music Awards show and do it over the internet, thus bypassing the traditional television channels.
The real winner in all this is the company that had the foresight to predict and bet on this shift: Google. It Is not hard to fathom that every time a Google exec watches traditional TV it is viewed as lost revenue. No search capabilities, limited interaction with television set. Since the days before the internet there were those who were betting in interactive TV. Former Microsoft CTO, Nathan Myhrvold believed that to be the future. It may still happen but if it does the internet will be its backbone. The thing to keep in mind about this is Google makes money on search, but in order to make a lot of money in the search advertising business you need traffic. Google is using YouTube to expand its potential audience for search. In the end however it is all on the Worldwide Web.
A lot of Google’s success can be contributed to indirect selling models. The YouTube Music Awards are yet another example of where Google will leverage viewer eyeballs to generate more search advertising revenue. As time goes by and the viewer ship increases so will Google’s ability to monetize those net new viewers and increase the average revenue per user (ARPU). They will then funnel this money to other ventures that will either contribute or fail, but Google will always be pushing the needle. If the YTMA is a big commercial success could we see scenarios similar to what Netflix is doing and have Google generate its own premium content? I would guarantee this scenario coming to fruition.
When Google bought YouTube some viewed as a poor purchase, one that would spend most of its time in litigation, but Google obviously saw a brighter future. Now with the success of the YTMA one can start to envision what this will be. One of the holy grail’s of consumer technology has always been cracking the code to utilize and monetize the last great user interface: television. It turns out what was needed to make this happen was a connection to the internet. Then once you have this internet connection how do you drive traffic to where you want it? This gets back to the old axiom “content is king”. If you have the right content they will come. It is also important n this day and age to get younger audiences engaged as they are the first consumers of technological shifts. With YTMA awards and other new internet content (primarily from Netflix) we could see the age of interactive TV finally begin to be realized.
This is a brilliant idea and move by Google that will garner them a lot more of positive press and attention to their brand. It also threatens to leave their competitors in their wake as they struggle to create an even tighter relationship with the entertainments up and comers and its elite. Apple has the relationships but the integration between the device and the web is not nearly as tight as Google (Search, YouTube, Android, Chrome etc..). Microsoft may be better positioned with the XBox and its gamer community. More importantly many of these games are going Hollywood as games are turned into major motion pictures. Where Microsoft is hurting is it has a weak music story and poor track record in the industry, plus it is way behind in the devices landscape. Google is leading this decade as they right now are in the zone where they have more foresight into the future and where things are headed. It is rarefied air that they exist in right now. Having been through this before the danger is thinking it will last forever. As long as you are scared of the future you stand a chance of success. When you take the future for granted you are doomed to failure.
Good Night and Good Luck
Hans Henrik Hoffmann November 8, 2013
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