I've been seeing all these blog conversations about Google buying out YouTube, and now about MySpace calling some meeting with Google. People sure like to speculate about the drama about to unfold, but it's really quite simple.
Google cares about two things: profiling and ad inventory. In order to grow/keep a fat market cap they have to continue to deepen their user profiling so they can continue to improve the relevancy of their advertising. At the same time, they need to broaden the number of advertising opportunities to each of these users. Well, first it was search, then it was adsense, then the toolbar/desktop products, then it was big publisher deals like MySpace. Now it’s video, and a lot of it at that.
The more pageviews they buy, the more they know about their users and the broader and more valuable the ad inventory becomes. It’s that simple ... they've just buying more eyeballs, which helps them and their advertisers.
Now that Murdoch knows Google owns YouTube, he can reconsider his plans to create his own YouTube service and instead “remind” Schmidt that 70% of his YouTube pageviews can be gone overnight pretty easily. I’m sure we’ll see a new deal shortly between YouTube and MySpace.
MySpace is the largest "publisher" for YouTube videos and is certainly in the position to expect some compensation for generating all the pageviews that Google will make money on.