Inevitably, Google Steps Further Into The Content Business

Google likes to keep up the pretense that it’s not a content company like traditional media companies that produce content and sell ads against them, and that it doesn’t compete with them; instead it provides platforms for them to distribute and monetise their content. Of course, that’s (to use a technical term) rubbish: Google does produce content; it just happens to be generated by computers and third parties instead of creatives on Google’s payroll. Google’s content is unique (extremely relevant search results), as is the way it’s consumed (often with purchasing intent), which makes for an outstanding business model. But The New Yorker’s content is unique, too–it doesn’t mean it’s not in the content business. 

All of which is a long-winded way of saying that this position is becoming increasingly intenable for Google, with the news that it is investing in Machinima, one of the biggest producers of YouTube videos, with over a billion views. From all the reports we’ve seen this is an investment by Google itself, not Google’s arms-length corporate VC Google Ventures. This is part of a long one-step-forward-two-steps-back Google has had with explicitly backing or making content, but this is the most explicit step yet. It previously acquired another video content company, Next New Networks, but steered it away from content producing and toward advising other YouTube content producers.

Google wants YouTube to become the next cable. To this end, it is backing content producers, with cash grands as well as prominent placement on the site. But just as cable has integrated up the value chain, there lies the temptation for Google. 

In media, content is great, distribution is great, but the truly outstanding businesses have distribution and content. This is what Google has in search: its search engine is both the distribution and the content. In video, it has the distribution (YouTube) but hardly the content. It looks increasingly inevitable that if it wants to remedy that, it will need to take drastic steps toward becoming a content company. 

The slide illustrating this report, showing how strong “content plus distribution” is, is from our Future Of Media Presentation →

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