CNN Debate Shows YouTube Has the Popular Vote

After Monday's event, Google clearly has more potential to tap.
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Like the 2008 presidential campaign, online video is a crowded field. And that's what makes the most recent showing by Google's (GOOG) - Get Report YouTube so clever.

On Monday, YouTube co-sponsored a Democratic presidential candidate debate with

Time Warner's

(TWX)

CNN network. Presidential candidates answered questions filmed by viewers and displayed their own YouTube-style political commercials.

The event showcased the enormous clout that the two-year-old video-sharing site commands. It was also a shrewd marketing move on YouTube's part, giving its brand and unique user interface wide exposure. In a rapidly growing field that's rife with new entrants, parading YouTube on the national stage again established it as a cut above the competition.

When YouTube opens up to video ads, advertisers may well be willing to pay a big premium over other user-created content sites given the friendly, household-name status the debate helped bestow on the company.

The debate also highlighted the power of this yet-to-be-realized Google asset, which has recently taken a back seat to the company's more profitable pursuits. But as Google looks beyond search for new sources of revenue, investors should be reassured that YouTube's reach and influence continues to grow at a blistering pace.

YouTube's audience grew 222% year over year in June, according to researcher ComScore. Popular sites like

Facebook

and

News Corp.'s

(NWS) - Get Report

MySpace grew 103% and 35%, respectively, over the same period. The average minutes per visitor, meanwhile, grew 170% at YouTube. Facebook and Myspace grew at 50% and 6.4%, respectively.

YouTube's stellar performance has briefly been ignored by investors who

took down shares of Google late last week after the company posted only its second quarterly earnings miss of its public company existence. Google closed Tuesday up $1.49, or 0.3%, to $514.

Monday's debate illustrated the raw, vivid, and quirky type of communication that lies at the heart of YouTube's success. Those asking questions used a variety of original and widely reported set of stunts to make their points, ranging from a cancer patient pulling of her wig to demonstrate the impact of chemotherapy to an enthusiastic gun owner cradling his assault rifle.

The authenticity of the videos seemed to inspire a greater degree of sincerity in candidates' response, who usually have little trouble evading tough issues and getting to talking points. But it was tougher to dodge the unpolished yet poignant user-created videos than it was those generally posed by professional journalists.

A demonstration of user-generated content's power is especially reassuring given the billion-dollar lawsuit that

Viacom

(VIA.B)

filed against YouTube earlier this year. Viacom claims that YouTube essentially built its business by pirating clips from popular Viacom properties like

South Park

and

The Daily Show

.

But rather than displaying television programming on demand, what users seem to find appealing about YouTube is the kind of unvarnished video they can't find elsewhere. Reports earlier this year that showed that Viacom titles were

nowhere near the top of the list of most-watched YouTube videos -- and the site's soaring popularity even after it removed all Viacom clips -- tends to support this, as does Monday night's debate video.

The aggressive stance recently taken by the usually easygoing Google CEO Eric Schmidt suggests that the company can trump Viacom in court as well. Rather than the conciliatory tone that would boost the chances of an out-of-court settlement, Schmidt recently decided to make the matter personal by attacking Viacom and its CEO directly.

"Viacom is a company built from lawsuits -- look at their history," Schmidt told reporters earlier in the month. "Look at who they hired as CEO, Philippe Dauman, who was general counsel for Viacom for 20 years."

That flatly contradicts Dauman's somewhat conciliatory stance at a technology conference in May. "I didn't want to sue YouTube," he said at

The Wall Street Journal's

AllThingsD conference. "I'm all about doing deals."

But if Google's new posture is any indication, the time for doing a deal has long passed. And the votes are in.