Why Google Didn't Buy the New York Times

Includes: GOOG, NYT
by: Susan Mernit

I started the day reading about how TechCrunch's Mike Arrington felt attacked by the journalists at the Online News Association conference, and ended it hearing that Google (NASDAQ:GOOG) had indeed bought YouTube for $1.65 billion in do no evil stock. That news got me thinking about what Google mighta coulda bought with their money and didn't, and I got to asking myself where the paradigm shift was in that.

For instance, with that kind of dough, Google could have bought the New York Times Company (NYSE:NYT). I remember talking with Timesman Martin Nisenholtz about how the NYTimes was one of the biggest consumers/placements for Google AdWords, right behind the big portals as they were still called then, Yahoo and AOL (this must have been late 2004.) Nisenholz felt that the Times had to find a way to roll up in size, and not soon after, they bought About.com.

Presumably, if Google was looking for a property that they could own to place their own AdWords on, they could have considered buying The New York Times. But no--they didn't, did they--and the decision to spend all this money on YouTube shows that the coffin nails of mainstream media are already strewn across the open grave (Yes, I am feeling poetic tonight, that kind of day).

The amazing miracle of YouTube versus The Times, as everyone reading this blog surely already knows, is that YouTube is a platform where cream--user-uploaded videos--rises the the top, to be savored by the world, while The New York Times Company is an information organization that pays thousands of journalists, designers, business people and administrative types millions of dollars to create expert content that tells people what to think and what to like. And honey, that day is passing fast.

Even though YouTube has copyright issues to work out, and no established revenue model (yet), it's the kind of social media platform that is quickly--for better or worse--claiming the attention of people who once turned to newspapers, cable TV and online news--just a few years ago--but who are now making user-generated content--and fan-uploaded music videos---a focus of their time.

Further, after a year in operation, YouTube reportedly has 50MM users worldwide, while after 100+ years in operation, the NYTimes has what, 20MM(12 MM registered, plus another 8...)

In terms of traffic and popularity, YouTube had 12.699 million visitors in May 2006, according to a recent MediaMetrix press release. Seeking Alpha reports that the NYTimes had 29 million visitors a month in March 2006 and ranked No. 56 in web traffic. (The revenue for the entire company in that period was $832 million.)

Do you wonder which business had better margins? Anyone want to guess the Times? (Thought not.)

The point here--just to kick it a little harder--is that this is yet more evidence how social media platforms that are shifting the paradigms in a profound way--Not only does YouTube have a mass market, it's video on the web appeal that the more high-brow Times will never have (Is YouTube the next MTV?). Furthermore, it's a platform that gives Google the opportunity to morph into a multimedia MySpace ecosystem, way beyond what Orkut could ever be--and most cruelly, it's something that teens and twenty-somethings care about, which may no longer be the case for The New York Times.

So Google bought YouTube, not a media company, and the fact that doesn't even surprise anyone one anymore and that it makes perfect sense, that, dudes, is a paradigm shift.