Thursday, March 22, 2007

DISCUSSION: WAS GOOGLE'S US$1.6 BILLION PURCHASE OF YOUTUBE WORTH IT?

Google paid a hefty price for YouTube, but after six months, advertisers still are taking a wait-and-see approach as the company tries to figure out a viable advertising model than can make money without alienating users. Meanwhile, Viacom has filed a $1 billion copyright-infringement lawsuit against Google, hinting that mainstream content producers aren't going to sit idly by and let their content be streamed for free.

QUESTION: Do you think Google's $1.65 billion purchase of YouTube was worth it?

11 Comments:

Anonymous Anonymous said...

A lotta money down the YouTube, really. Google seem to have more money than sense. All I can see is other media owners lining up behind Viacom to sue them.

4:57 PM  
Anonymous Anonymous said...

Within a year, YouTube will be closed down. It's a mega loss maker the likes of which the world has never seen. Not even Google can keep it going for much longer. It will be closed because it will eventually affect the Google share price when investors figure out what a stupid decision it was to buy it. The ultimate Emperor's New Investment.

5:05 PM  
Anonymous Peter Grasse said...

I think Joost has already answered that question. Google didn't look before leaping. People are smarter than You Tube, DJ's, The Gap & Blogs. We ultimately would rather watch, listen, wear & read things written by people with more skill than ourselves. Next, plastic technology will enable the masses to try their hand at design & architechture. That will be fun (for a few years). What's next?

2:08 AM  
Anonymous Anonymous said...

What if I open a youtube style thing in second life? (is that possible and how much would you pay me for it)

10:15 AM  
Anonymous Anonymous said...

I think it could still prove to be a wise investment. Since YouTube implemented the clause that grants them ownership over anything that is uploaded, it means that they have suddenly got a vast resource of content. Over the next few years as the PC and TV become one, advertising won't be key, content will; and Google is ready.

11:29 AM  
Blogger Stan Lee said...

Hate to say it, but most of us are a bit too old to comment.

Ask a kid about YouTube. They love it. For them it's not a website, it's another tv channel. Where they watch whatever the hell they feel like, whenever they feel like it.

Kids don't care about ownership or copyright. The miniscule sales of the iTunes store compared to illegal downloads has proven that.

Speaking for his generation all those years ago, Kurt Cobain said, "Here we are now entertain us."

Kids of today don't want media giants and ad agencies etc to entertain them. They will entertain themselves. And do so on their own terms, regardless of who owns the copyright or intellectual property.

2:13 PM  
Blogger jj said...

A lot of anonymous people with strong opinions, just in case you are wrong? Fair enough I suppose.

5:13 PM  
Anonymous Scotty said...

The legalities of uploading a clip to YouTube are clearly stated when you upload.

STEP 1 has this notice.
"Copyright Notice. Do not upload copyrighted material for which you don't own the rights or have permission from the owner"


STEP 2 has this notice.
Do not upload any TV shows, music videos, music concerts, or commercials without permission unless they consist entirely of content you created yourself.

By clicking "Upload Video," you are representing that this video does not violate YouTube's Terms of Use and that you own all copyrights in this video or have express permission from all copyright owners to upload it.


In the first instance, each user is breaking copyright by possessing the clip they then state their ownership of the clip's right's by uploading it.

Sure, in most cases this is not true, but the complexities of fighting this case means the lawyers will win.

It may eventually be regarded as a test case for all internet related copyright infringement in the future.

I agree with Stan. It is a TV channel. FUX can talk about "On Demand" as much as they like but the delivery of poor quality humour on demand is here now!

5:30 PM  
Anonymous Anonymous said...

The web was established as the peoples voice to avoid the censorship and favouritism of commercial media. Of course it has now been taken over by big business. Fortunately it is uncontrollable. The sites that exist in the spirit of the original web will flourish - in spite lof the fat accountants in LA try to stifle them. Few have a profitable model for their internet investments -Google is one of the few. So if they made a mistake, big deal! That's the risk that goes with being pioneers. Unfortunately for them, even Googles days are numbered. They have become more corporate, more ad addled and less service info orientated.
Let the revolution roll on. Change is good.

10:58 PM  
Blogger Chris said...

CHRIS SIMON from Malaysia...
Jj said... A lot of anonymous people with strong opinions, just in case you are wrong? Fair enough I suppose.

Afraid I agree with jj.. Whether right or wrong! Debate is debate, huh? Anyway-since Google’s buy in, have you seen how many debates there have been? I go back to what I and a lot of my buddies originally debated all over the world-before ‘the present’: “The founders of You Tube were smart to take the money and run. They were running out of money because of their bandwidth costs and limited revenues which meant they would have to dig into the well again and get diluted more. Since they were not going to get much more than $1.6Bill, there was no point to wait. They were also starting to get a lot of heat as evidenced by Chad Hurley’s poor panel appearances at many conferences when he just got beat up for having no business model; as well as the imminent lawsuits facing You Tube then from Universal Music and Warner Bros. As a part of Google, it will disappear into the Google machinery and its numbers integrated so we will probably never know if it will ever make money. The rumor was it was losing $2Mill a month in just bandwidth costs alone, but what’s $20-30Mill in losses to a Google that can make that much in a few days? Lastly, the deal was a brilliant defensive land grab. Consider that in the last year before buying You Tube, Google bought 5% of AOL for $1Bill to lock up search and ads on this Top 5 site, $900Mill to News-Fox/My Space to lock up search and all ad space of the #2 and soon to be #1 traffic site and then $1.6Bill for You Tube to lock up the #1 video and #5 overall site on the web. That means for a paltry 3% of their market cap ($3.5Bill out of $125Bill), they locked up ad space for 3 of the top 5 sites on the Internet and they themselves were #3.!”

AND TO THE PRESENT….I really don’t think any of us could ever believe that Google are stupid! I’m one of the many, many beta-testers of Joost and think it’s brilliant (still with many reservations) but it’s entirely different to the SOCIAL phenomenon of You Tube.
It was obvious new video sharing sites would crop up everywhere. I’m losing count of it. Haven’t NBC and News just set up one? But the point about it is Social Technologies or Social Networking and user generated content. Thousands upon thousands of hours of easily searched premium content, personalisation, mashups, playlists and community. Linked portals with My Space and many, many more. Major Distribution. So You Tube is not God, (although Google comes in at a close second). But look at its strength and it’s still number one. It’s user base is what? 150+ million monthly visitors or something? So the site is CRITICAL MASS. That’s billions of uploads every month and, of course, today is upload day, not download day! I think some research tracker called comScore estimate that last month visits were nine times more than 2006! However, page views are diminishing quite rapidly. But You Tube will always be one of the 7 Internet Wonders of The World and Google were smart to buy!

12:40 AM  
Anonymous Anonymous said...

I agree with Chris, the purchase of YouTube was not a clear move to make a profit, instead it was to stamp the Google footprint on the internet/the world.
They did not want to be left out in the cold. We had the head of Google Australia present to my company recently and the first question that was asked of him was 'So what now with YouTube?'. Obviously the intoduction of advertising space is a given moving forward, however leaving the user generated content untouched (barring the obvious Lawsuits) is somthing that is vital.
At the time of purchase i believe there were an estimated 72 Million YouTube Members, at 1.6 Billion dollars for the company that is roughly $20 per memeber! Google are not ignorant - that would never seem like a great ROI oppurtunity.

Peace

11:15 AM  

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