Not in the revenue it generates, but in the opportunity it represents, and the leverage it provides to take advantage of that opportunity.
Facebook is planning to invest in screenwriter Internet startups in 2008. Very prominent people in both entertainment and high-tech see independent production firms putting their content on the Web as a serious alternative to Hollywood's traditional studio system; on the flip side of the same coin, a video startup which dumped its user-contributed content for paid content from professionals saw its ad sales skyrocket. This didn't begin with the writers' strike, but the strike accelerated it. And Vimeo has HD which puts paid iTunes movie downloads to shame.
I actually think the YouTube buy was premature, when Vimeo is so much better and the monetization really isn't there yet, but there's a lot of money there to make. Google gets its ass handed to it on a silver platter in China because the #1 Chinese search engine indexes MP3s and ID3 tags, and Google doesn't. What if Google indexed TV? What if Google indexed shows, and there was no TV?
What if Google follows Facebook's lead and invests in screenwriter startups?
To make matters worse, there is an elephant in the room: Google. It has already figured out digital distribution in a more economic and pervasive way than any traditional media company (so has Apple, by the way). Via YouTube and its other divisions, it is developing and refining ways to make money on entertainment and Wall Street, at least, buys what they are doing. Google is currently valued at over $200 billion dollars -- compare that to the Walt Disney Company at $65 billion. Now Google is working out the last piece of the entertainment puzzle: content. Once it does, it could be game over.
Entertainment lawyer Kevin Morris for the Huffingon Post. Read it.