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Google and Facebook Make Their Moves, for Better and Worse

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It's hard to believe that the same company that's behind YouTube Premium also green-lighted Google Glass.

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All Web companies should act like Google (NASDAQ:GOOG) and Facebook (NASDAQ:FB). That is, every time they implement a really good idea they should simultaneously let loose with a real stinker. This keeps investors and the general public amused, or bemused. It also provides a steady stream of business school case studies that may edify future generations of entrepreneurs.

Witness these recent examples of decision-making, good and bad, from each company.

The YouTube Premium Option

YouTube reportedly is about to announce its introduction of premium pay channels in special interest areas, like children's programming, music, comedy, and more. Subscription pricing is expected to start as low as $1.99 per month.

YouTube fans still will be able to upload or download as many crazy cat videos as they want for free. But programmers will have the option of moving behind the pay wall, and offering their content without advertising.

This is such a great idea that it's amazing YouTube owner Google didn't think of it earlier-like a couple of years ago, when original Web programming initiatives first got to be a hot topic.

As an alternative to advertising support, which so far has proved to be meager, the new revenue option could unleash a wave of creativity and higher production values that will benefit its producers as well as Google. If it succeeds, we may soon see young producers abandoning cable television for the relative freedom of the Internet.

This assumes that YouTube will keep its executive decision-making to a minimum, as it always has on the advertiser-supported site. The pay options are expected to be video-on-demand databases rather than programmed "channels" in any conventional sense.

On the downside for consumers, a ton of "free" content will inevitably move behind the pay wall. But given the current low level of advertising revenue for video, that content will inevitably move behind somebody's pay wall, and soon.

YouTube dominates the market for advertising attached to digital video. But even if that spending climbs to the record $4.14 billion expected this year, digital video will still carry only 2.4% of advertiser dollars, according to CNN.

Google Glass: A Fashion Faux Pas?

If the Google Glass experiment goes down in history as a misstep, the pivotal date of its demise will be recorded as May 4, 2013. That's when Saturday Night Live cast member Fred Armisen appeared on the Weekend Update segment looking like a dork.

His performance as a twitching, muttering, eyeball-rolling geek wrapped up in his goofy headgear may put an end to anyone's idea that Google Glass is socially acceptable, much less cool.

If anybody needs more evidence, there's a Tumblr page called "White Men Wearing Google Glass."

Here's a related question: If Apple (NASDAQ:AAPL) really is developing an iWatch, is that any different? Will people look less silly interacting with their own wrists than they do interacting with their heads?

Facebook's Mobile Move

Investors were heartened last week by signs of "improved mobile monetization," as they call it, in Facebook's first quarter earnings report. It seems that 30% of the company's advertising revenue now comes from mobile placements, double the percentage just two quarters ago.

That addresses a major concern about Facebook, that it will be unable to hang onto its massive audience as it segues to mostly mobile Web access.

Which brings us to a much more important company project-Facebook Home. This mobile app places Facebook at the forefront of a user's smartphone experience-literally replacing the usual selection of icons with a Facebook feed.

That's a smart move for existing members, who are likely to at least scan their Facebook updates more frequently. It's even smarter for newer emerging-market users, who may experience this Facebook-centric page as a real home page, the way users once focused on the top-level pages of AOL.com (NYSE:AOL) or Yahoo.com (NASDAQ:YHOO).

Unfortunately, Facebook Home may be getting a rocky start. CNet reports that installations are slow, and early user reviews are negative.

Zuckerberg's Political Misstep

Surely there couldn't be a downside to Facebook founder Mark Zuckerberg's decision to champion immigration reform. If anything, it highlights a positive aspect of the issue: The desire of companies like his to recruit the world's best employees in order to build and nurture America's "knowledge economy."

But his political action committee or PAC, called FWD.us, has been funding advertising campaigns that praise congresspeople from conservative districts for supporting various conservative causes, so that those congresspeople can get away with one little lapse from conservative orthodoxy-that is, a vote in favor of immigration reform.

The PAC is churning out highly partisan attacks on "Obamacare" and "Chicago-style politics," and apparently endorsing highly controversial measures like oil drilling in the Alaska wilderness and the Keystone XL pipeline.

Obviously, Zuckerberg's name and face is not all over these ads, but it's no secret that he is behind the PAC.

So, does this mean that the highly visible Facebook founder favors drilling in the Alaska wilderness, or opposes Obamacare?

Not at all. His bipartisan PAC would cheerfully bankroll a campaign on either or both sides of those issues if it would get another vote in favor of immigration reform.

Somehow that makes it ickier, public relations-wise. Unless Zuckerberg really wants to alienate a really broad spectrum of his site's users.

See also:

When It Comes to Investors and Amazon, Is Love Blind?

Should You Buy Bonds from Apple or the US Treasury?

Apple: Is the Rebound Real?


No positions in stocks mentioned.
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