- Google's search business makes so much money that they could leave the YouTube service the way it is and make back their $1.6B in 6-7 years just by putting Google search boxes all over the site.
- Given that Google is also not afraid of taking risk with IP issues--and going to bat in the courts over them. Google is the perfect home for YouTube because Google is excellent at holding the line on what they think is fair use and creating tools for folks to opt-out of their service. For evidence of this check their thumbnail, book-scanning, and news services. They've gotten attacked on all of those fronts and they've held the line, gone to the courts, all while respecting copyright holders.
- Since Google is not a big media company--but rather a friend of content companies--they will not take the flames from other media companies over buying the asset. They're the advertising and technology platform company, so the media companies will feel comfortable with them buying YouTube. It's like a neutral party buying the biggest asset in play.
- $1.6B is the number going around. Is it worth that number? Probably not, but given that Google has an advertising machine at their disposal they're probably the only buyer in the market who could pay that price and have any chance of making it back. Also, buy taking out YouTube they will have locked up the three biggest non-Adsense players on the market: AOL, MySpace, and YouTube. Microsoft Adcenter and Yahoo Publisher Network are already facing an uphill battle... these three deals really box them out for a five years to come.
- Google will never put pre-roll ads on the service like a media company would want to do.
Google to buy YouTube? Perfect match.
This makes total sense to me for a number of reasons:
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Reader Comments
(Page 1 of 1)2. What are they buying? traffic? a brand? for $1.6 billion
Not only does it put them in direct competition with MySpace, its a pointless deal.
You've said yourself that the current age of buyouts favours the giants just building a separate site and throwing their brand muscle & ad budget behind it.
This sounds like a terrible deal, a wonderful chance for YouTube to become Google's broadcast.com
From what I hear this is mostly a deal to keep the stock price buzzing; with adwords levelling off, the loss of the Chinese market & delays with a number of Google releases (how long does Gdrive take?) & a rather difficult start to a VOIP rollout. It's about time for a realistic PTE
Posted at 2:19PM on Oct 6th 2006 by Adam Cains
3. Jon: You could put dates on those comments and along the way YouTube has been able to dodge the threat of lawsuits and continue to grow on the backs of other folks IP.
Napster had the same growth but wasn't able to close a sale, and there is a chance the YouTube will not close this sale.
This is how it goes when you're building a service that is built on piracy: you could get knocked out or sell the problem to someone else. If you were going to pick a person to sell the YouTube problem to, Google is the best choice. Google is willing to a) lose money on YouTube and b) take on the risk of YouTube just to lock up their amazing Adsense business.
That is what Google is all about: Adsense. Adsense is going to be the highest margin, greatest business created in the history of man kind. Second only to maybe the Office/Windows machine. If this closes Google will have put $3B+ behind their AOL, YouTube, and MySpace deals and closed off the market for Yahoo and Microsoft's competitive products for five years. Brilliant gambit.
If the YouTube guys pull this off it will be the greatest business gambits in the history of the Internet... heck, all business. They will have done what Napster could not, and to that I will give them all the credit in the world.
4. Of all the posts I've read about this today, I'm sad to say that USA Today hit the nail on the head:
http://blogs.usatoday.com/maney/2006/10/youtubegoogle_r.html
Posted at 5:18PM on Oct 6th 2006 by CD
5. >>Their the advertising and technology platform company,
Posted at 8:05PM on Oct 6th 2006 by Brian Clark
6. Great analysis.
Posted at 10:23PM on Oct 6th 2006 by Craig Danuloff
7. How Much Would Founders and VCs Make on A YouTube Sale?
YouTube may be wanting to sell because there are so many questions about its future.
How much would everyone make if YouTube sold today?
If the company sold at $1.5 billion, assuming the rule of 3, i.e. VCs own 1/3 and Founders own 1/3 and employees own 1/3, then here is what everyone would make:
Sequoia Capital - $500 million. They invested about $30 million So, that would be 16x their money. Not bad. Not a Google homerun, but great for less than two years worth of work.
More ...
http://mrwavetheory.blogspot.com/2006/10/how-much-would-founders-and-vcs-make.html
Posted at 5:20AM on Oct 8th 2006 by Mr Wave Theory
8. Jason,
Thought I might get your attention by linking, then realized Technorati hasn't updated my index in over 50 days. DOH!
Wondering what you think about this line of reasoning:
http://blog.classyfeeds.com/2006/10/12/calacanis-is-only-partially-right-about-adsense/
Posted at 4:32PM on Oct 12th 2006 by Matt Terenzio
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1. Here are some of your past thoughts on YouTube... Change of heart?
"That's why you see everyone making their own syndicated video services--we all know that YouTube is on the brink of extinction. "
"Only an idiot would pay someone $1b for technology that is a commodity and traffic that is based on their IP!"
"Like Napster, it was fun while it lasted..."
"If YouTube makes $250M from a sale their founders and VCs should give $225M of it back to the content owners like NBC and Loren Michaels who they stole it from!"
"If someone buys YouTube they will not be rewarding entrepreneurship, they will be rewarding piracy and they should be ashamed of themselves."
"Also, I don't think YouTube is gonna get bought at this point. This is the hottest M&A market *ever* for Web companies. Just look at Viacomm firing Freston over losing MySpace to Fox and bringing in a new guy who's focus is to find the next MySpace earlier. Whoever buys YouTube gets left holding the lawsuit bag--just like Napster. I wouldn't touch it with a Yahoo's 100 foot M&A pole!"
"It's a game of whack-a-mole and YouTube isn't going to get away with it for much longer."
"The fact that folks are talking about them being bought for some large amount of money by Newscorp is commical. They are a glorified FTP site with TAGS people! I could set this up in a weekend with two kids in high-school and a couple of cases of Red Bull."
Posted at 1:41PM on Oct 6th 2006 by Jon Gales