The New York Times headline was that announced the acquisition was GooTube, which made me laugh. The rumour of a Google swoop for YouTube emerged on Friday and by the end of Monday it was a done deal. Google was not the first “giant with a pile of cash” to go after YouTube. Yahoo!, News Corp, Viacom and Microsoft had already knocked on the door, only to be told that YouTube didn’t want to be acquired and didn’t need to be acquired.

Maybe it was the natural charm of Smitty (Google’s CEO) that made the difference—plus a promise of non-interference and persistence for the YouTube brand. Google’s shares actually rose on rumours of $1.6 billion bid so there are some investors out there that believe YouTube is worth that kind of money. Here’s what I think they’re thinking: “Google will easily be able to monetize YouTube and 100 million video views per day will soon become millions of video advert views per day.”

Dream on, is what I’m thinking. There’s a commercial war developing out there between the “people will buy video” camp (represented by Apple and most movie companies) and “people will watch adverts rather than pay” (backed by TV companies—most of which are owned by movie companies). If that sounds a little schizoid, don’t worry, just think of it as a civil war.

Under normal circumstances, I’d back the video adverts to win in the mass market. But now I’m not so sure—because software that skips the ads will inevitably appear, just as software which undermines DRM will appear. The truth is that most people resent adverts and fast-forward them out of existence, if they can. However, people are happy to watch infomercials if they are well produced. So in theory the future should consist of adverts we want to watch.

I believe that Google will have its work cut out to build a revenue stream that justifies the purchase price of YouTube, but I also think that it doesn’t really matter too much, because the consequence of Google not buying YouTube would have been that someone else did—and Google would have remained third in the video game (behind YouTube and MySpace). Google cannot afford to be third.

YouTube also brings something to the party that Google needs. Despite being web-savvy in many ways, Google is not social-network savvy. YouTube beat everyone else to the punch, because it based its video business on a very effective social network of recommendations. Google can learn from that. Google’s rise in the past few years may have been impressive, but it isn’t the “next Microsoft” yet.