Arts

The movie mogul of the Internet: YouTube

March 28, 2011: 1:24 PM ET

Google has long been a media company in denial. Now it's beefing up YouTube to become a studio system for a new era of content production. Keyboard cat, meet the evening news.

By Dan Mitchell, contributor

For more than half a decade, people  have been debating whether Google is a media company. The question is ultimately pointless, though it keeps being asked in large part because every time it comes up, Google (GOOG) peevishly insists that it's not a media company, it's a technology company. What's the difference? Just compare the stock performance and profit margins of the two industries. The company also wants to avoid the liabilities that might come from being perceived as a publisher, as opposed to an indexer, of content.

Whatever Google might say, though, of course it's a media company. It presents content to an audience, against which it sells ads. That it doesn't produce much of its own content is beside the point. Neither does Netflix. Neither do many cable TV channels, local stations, or distributors such as Buena Vista Television. All are media companies. The issue isn't whether Google is a media company, but what kind of media company it is. It's a new kind -- one that operates by the economics of the Internet, with no legacy ties to the economics of television, movies, or publishing.

It seems likely that, sooner or later, Google will have to drop the pretense. The company in recent months has placed a new emphasis its YouTube division. It has recently hired several big names – all "content" people -- from companies like Netflix (NFLX) and Paramount. It has made acquisitions to improve the quality of its offerings. It is planning to spend a reported $100 million to create new channels for celebrities , whom it will help create content and with whom it will share revenues. It has rejiggered its navigation to make it – somewhat – more like cable television and less like a place for people to post their wacky cat videos. More

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