YouTube, Google … fuggedaboutit

29 Comments

TechCrunch writes about a rumor out there that Google will buy YouTube for around $1.6 billion. Hmmm, haven’t we heard this story before: (Fill name) will buy YouTube for $X Billion. At this point, we are going to wait for the fat lady to sing. Anyway the deal has as much chance of happening as me dropping 40 pounds. Google folks have to be aware of the fact that the minute they buy YouTube, they are going to have to deal with lawsuits by truckloads, which could cost them money, but more importantly distract them from their core business.

WSJ is reporting the story, so there might be sparks if not a fire here. Still they are sourcing it to one person and with the usual disclaimers. Here is an open URL for the WSJ story. I just got off the phone with Google spokesperson who declined to comment saying that it is company policy to not comment of speculation and rumors.

29 Comments

hrm

Amit – from your #3 point – in the beginning YouTube did run Google ads but that stopped a while ago. The main source of ads currently is Doubleclick. It’s not clear why the Google ads stopped – maybe the hefty % of video that is obviously in copyright violation was the reason. In fact, the same reason why ads have not showed up on Google Video.

alan

Google has been a rumoured suitor for a while, and the rumoured price has been $1 – $2bn for months now.

Question is – if you have Google Video already, why spend $1.6bn rather than build it yourself?

What does that say about Google capability, despite Google having, according to The Economist this week, a recruiting machine that scours the Earth for the brightest and best?

Still, it is only a Rumour ;)

Your Mama

It sounds like the stupid rumor from two weeks ago that Facebook was being sold to Yahoo for about the same price.

Every two weeks a stupid rumor will pop up… but really, earnings are almost here so there is no chance of an acquisition just infront of earnings.

STUPID.

Amit Chowdhry

Hi Mr. Malik,
Just wanted to let you know that I agreed with you on this post for the following reasons:

1.) First of all is the obvious: $1.6 billion is a lot of money. Even if Google’s market cap is over $100 billion, why should they spend so much on acquiring a company and then dealing with the courts and lawyer fees after acquiring it when they already have the technology available. Have we all forgotten about Google Video?
2.) Apple and Google are partnered now. What does Apple and Google have in common? They charge $1.99 for videos!! YouTube is completely for free. Buying YouTube would not help ripen the relationship Google and Apple are developing (like my “ripen” pun?).
3.) How does YouTube currently make money? Three ways. First there is sponsored channels such as Paris Hilton’s and NBC’s. Second there is funding coming in from VC firm, Sequoia Capital. Third of all, they’re depending on Google Ads to make money, but in this same process, Google is making a lot more money from their Adwords program generated by YouTube hits and clicks.
4.) If Google buys YouTube and attempts to converge it with their own business and it flops, think about how much money Google loses. Right now the YouTube model works for them and Google is making money already from their site. However, YouTube can always threaten to side with other advertising programs and switch away from Google Ads to possibly speed up talks (if they are actually talking right now).

Nick Hawkins

I’m still caught up in this whole “I don’t need a business plan to make money” Web 2.0 thing. Now, if Google had some sort of targeted ad system to analyze the video and give matching ads (I don’t know how you’d do this and think it’s not possible). But even then I’m just pulling this out of my ass…

Vidizer

I voted “weekend is here”. Yet, it definitely makes sense for Google to buy Youtube. Their Google Video service is lagging too far behind for anyone’s comfort.

Simon Cast

A partnership is more likely. An agreement to use Google’s Advertising platform would follow the company’s current strategy of form partnerships that utilise the company’s platforms.

Sergey

I don’t know if anyone at Google have read Robert Kiyosaki but YouTube doesn’t look like an asset at all. Did they come up with some wicked business model noone else did? If not, buying YouTube would bring GOOG down (if stock markets were reasonable anyway).

Anonymous

If anbody says to me Google is buying youtube.. then i think that person shouldnt be taken seriously. Anti youtube lobby is waiting for youtube to be bought and than file a suit against that big pcoket company. I think more youtube breaks copyrights it
cant sell itself. Unless youtube changes it contnet uploading policy it will always be worth billions but nobody will buy, which means no value.

Vishal

Eray

its not common sense that defines a good deal. Actually in the web 2.0 bizz, there is no common sense at all, same as web 1.0.
1.5 billion is not such a big number for a big company like google. Take a look at google’s shareholder value and think about an acquisition – how much would such an nonsense deal push the stock’s prize… (usually, shareholder like nonsense).
Anyway, there will be a boom and bang in the future and many companies will hopefully be punished for their greed.

Mathew Ingram

I must admit, I’ve been a whole lot less confident in saying “That is so crazy it will never happen” ever since the eBay-Skype deal.

Charlie Sierra

Om, I’m only looking to drop 30lbs.

Oh wait, your post wasn’t about a new Web2.0 weight lost thingy. Nevermind.

Bill Kinnon

I bet it’s actually Mark Cuban buying YouTube. His previous Advertising Week comments were just an attempt to drive the price down.

TG

If anyone has ever dealt with the clowns that developed and run Google Video – they would know these two copyright violating entities belong together. RIP!

here’s a quote from Peter Chane at Google Video in a Wired Magazine Interview… http://www.wired.com/wired/archive/14.05/google.html

This is the best line of all …
Who’s your competition? iTunes? YouTube? Yahoo?
I’m not viewing those as competitors. I think the competition is content providers that haven’t looked at online as a distribution channel. Google Video and these other sites are saying, “Hey, you can make money online!”

Yup, boy genius thinks of his supply chain as his competition… way to go buddy!

And when there is enough money to be made from lawsuits – OH YES – those copyright holders will be there to collect.. you just wait and see… a good lawyer always counsels his clients to wait till the bounty is big enough for all to feast on…

And OM I agree with your odds… but again – you seen these crazy thing happen in the past…

Skibare

Watch Jim Cramer on Mad Money pump Level3 on the rumor of Google and YouTube.com joining hands in Video Nirvanna
Level3 carries BOTH Google and YouTube and A Sugar Daddy Like Google to Level3 is like music to my portfolio!
skibare

Khang Toh

This is very unlikely going to materialize. Base on some common sense.

Google has put a lot of work into Google video, partnerships, etc, I agree that a merger would be beneficial but not unless these issues get resolved first

  • Possibilities of pending ligitation from media companies.
  • Overvalued at $1 – $1.5 billion. Youtube has not make a single dollar to date, and burning cash like crazy, why take on a sinking boat? When myspace got bought, they have approximately 1200% growth in revenue, but that only put them at $560 million. How about youtube? I guess its too early to say without seeing numbers.
Om Malik

it is a story based on information from “a person” so not sure if i am buying this one for now. if it happens, we shall see. but then i also didn’t see the ebay/skype deal happening.

Alok

Well, well… if Wall Street Journal backs a rumour, it usually is a STORY.

http://online.wsj.com/article/SB116014813857884917.html?mod=homewhatsnews_us

Google Is in Talks to Buy YouTube

By KEVIN DELANEY
October 6, 2006 12:46 p.m.

Google Inc. is in talks to acquire popular video-sharing site YouTube Inc. for roughly $1.6 billion, according to a person familiar with the matter. The discussions are still at a sensitive stage and could well break off, this person says.

Dimitar Vesselinov

“Google folks have to be aware of the fact that the minute they buy YouTube, they are going to have to deal with lawsuits by truckloads, which could cost them money, but more importantly distract them from their core business.”

Om, Google Video is very similar to YouTube and I haven’t seen any lawsuits.

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