Is Google buying YouTube?
Is Google about to gobble up YouTube for a whopping $1.6 billion? What started as a completely unsubstantiated rumor courtesy of TechCrunch today took on a whole lot more credence when the WSJ.com, citing an anonymous source, came out with report stating that the courtship is on. Robust tech blogger Om Malik, however, is dismissing the likelihood of a Google-YouTube tie-up: "The deal has as much chance of happening as me dropping 40 pounds."
The WSJ.com couldn't reach a YouTube spokeswoman and Google declined to comment. The source, however, said that the talks could break off. There's been plenty of speculation this year about media giants circling the wildly-popular video-sharing site. Launched in early 2005, YouTube logs 100 million video downloads a day.
YouTube CEO Chad Hurley has previously insisted that YouTube is not for sale, although he's said that an IPO is possible.
There is certain logic to a Google-YouTube combination. Despite the stunning price tag and skepticism about YouTube's business model: $1.6 billion is a hefty chunk of change, but with the search engine's market cap hovering around $125 billion, Google investors would hardly notice it. And YouTube's marked lack of profits? Google has plenty of unprofitable projects of its own, so there can't be a lot of harm in adding another one. What about copyright problems with some YouTube videos? Google's already getting sued by scads of copyright owners. And buying YouTube would solve Google's nagging problem with its own Google Video: a lack of traffic compared to YouTube and MySpace Videos. For Larry and Sergey, being able to say Google's #1 in a field besides Internet search might be worth the purchase price by itself.
Many of the justifications cited seem to be categorically similar to "Google has a sufficient number of unprofitable or legally worrisome projects. There's no harm in adding another." That hardly seems like good rationale for a $1.6 billion acquisition.
If they do buy YouTube...they better not combine the two or rename it Google Video because YouTube is much better thab Google Video and has the community effect.
At first glance YouTube may seem like a gip at $1.6 billion. But if you do the math, it's a potential money machine. If there really are 100 million video downloads a day, and you put pre-roll ads before all the videos, at $8-10 for a thousand impressions...you're looking at a potential $365 million a year. That means the purchase of YouTube for $1.6 billion would break even in 4.38 years .
I disagree with Harry Chong. The reason most people use Youtube or Myspace videos is because there's no ads. People don't want to see ads right before they view a video. Google could profit some other way with ads. Overall though, one of the most famous users on youtube, Boh3m3, made a good point in one of his videos. Google can add some interesting features to Youtube and that'd be nice.
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