Print 8 comment(s) - last by crystal clear.. on Oct 12 at 5:34 AM

Is the acquisition a good move for YouTube?

Google today purchased YouTube Inc. for a reported $1.65 billion in a deal that will most likely help the company become a leader in the growing online video market. The deal is Google's most expensive acquisition that it has completed in its eight-year reign. Rumors of a potential buy out began circulating last week, and further reports claimed that a deal would be coming soon. YouTube will retain 67 employees, including the company's two co-founders – who are now both multi-millionaires.

Even though a number of readers and analysts think the merger is a good thing, it appears just as many are pessimistic about Google's decision to purchase YouTube.

Copyright infringement is a serious issue that Google will have to take a look at. Even though a lot of copyrighted material ends up being removed over time, it is still easy to discover a large number of copyrighted files being shared via YouTube. Universal Music is a prime example of a company accusing YouTube of costing the record company millions due to infringement. If Google can resolve some of the legal issues that it is acquiring along with YouTube, I believe the purchase will prove to be a good investment.

Remember Google Video? The service that has been a complete and utter failure compared to YouTube will not be eliminated any time soon. In fact, both Google and YouTube announced deals today with companies such a s Sony BMG Entertainment, CBS, Warner Music Group, and Universal Music group. The deal will allow users to watch music videos for free, while advertising revenue will head towards the proper parties.

Google has a number of ways that it wants to use YouTube to help push Google's online video campaign – including possibly creating a new video platform. The ideal situation would be for Google to provide its amazing advertising prowess alongside the vast popularity and creativity of YouTube's staff.

I am still very interested in hearing what you guys think about Google's acquisition of YouTube.

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customer group
By pinkpanther6800 on 10/10/2006 11:30:31 AM , Rating: 3
They are buying the customer group of 100 mil. people.
the product aint worth so much its the customer group.

RE: customer group
By Furen on 10/11/2006 9:36:12 AM , Rating: 2
The problem is the fact that YouTube doesn't seem to have much of a revenue stream. I suppose throwing advertisements here and there could help but there's only so much you can do without alienating your users. It seems to me that buying YouTube brings Google a whole deal of trouble and not a whole lot of benefits beyond the ability to "reach" these "customers." I assume Google does have a plan on how to capitalize on YouTube, though, or it wouldn't have bought it, but I just can't see where they're going with it.

It's a joke and a half
By Webgod on 10/9/2006 11:05:03 PM , Rating: 2
What more needs to be said? :)

Oh, it's an incredible waste of money.

RE: It's a joke and a half
By Mezo on 10/10/2006 5:07:39 AM , Rating: 2
it's only 1.65 billion :)

pocket change
By Kuroyama on 10/10/2006 9:06:51 AM , Rating: 2
To paraphrase a famous saying, "a billion here, a billion there, and pretty soon we're talking real money".

Google is throwing around money like water these days. For that kind of money they should have simply put a more serious effort into Google video many years ago and perhaps YouTube never would have turned into the phenomenon it is today. If they want to become a "portal" then they should just make up there mind and devote oodles of money internally, instead of this half-baked plan of having dozens of "beta" sites, most of which are not particularly well advertised, and often not particularly good.

Looks good to me...
By Trisped on 10/10/2006 12:25:28 PM , Rating: 2
The leagal concerns are not going to be that big. YouTub has already got people pulling the videos that shouldn't be there, so no judge is going to slapp them with a harsh fine. As long as the continue to increase their personel in this area, no one will touch them.

Personaly, I liked the idea of the google video site, but implementation was all wrong. You couldn't view the video at native res, or aspect, so you had to adjust your window to fake it or you had to deal with distorted pictures and pixelation. They didn't even have a good scaling mechanism. Hopefully they will combine the two systems and create one that is more powerful. That would be nice.

Excellent Move
By jasd2d on 10/10/2006 8:35:22 PM , Rating: 2
I think this is an excellent move because of two reasons: 1) Google's advertising prowess and 2)'s incredible popularity.

Google is probably working on a new, clever way to index and search video (maybe some sort of audio translator? or a way?) to generate keywords from the video that they can tie ads to. Adwords customers would be able to buy keywords that are found within the meta data of a video file and a text ad would display during the video, or pre/post like they do on videos. Imagine if the imbedded player that you can pull of the youtube site also included a scrolling ad ticker that changed depending on the subject in real time! That is super cool. Add in the viral nature of youtube content (even people like me who know zero HTML can grab a video and plop it in my blog) and you've got an interesting extension of Adwords.

I really feel this is a move that was made more to leverage adwords than to build equity for Google Video.

The connection
By crystal clear on 10/12/2006 5:34:56 AM , Rating: 2
The fact that the man who is perhaps Sequoia’s best-known partner, Michael Moritz, sits on the board of Google could have given the search giant more insights into the legal risks associated with YouTube, and therefore more confidence in pursuing a deal, Mr. Kedrosky said.

The deal by firms that share an investor is right out of the playbook of Kleiner Perkins Caufield & Byers, the venture firm that imported from Japan the notion of a keiretsu, or network of companies with interlocking relationships, Mr. Kedrosky said.

“The whole idea of the keiretsu was friends selling to friends,” he said. “The model worked gangbusters for Kleiner Perkins.”

Source-N.Y. Times

Sequoia capital was also involved in the financing of the start up firm-Google many years ago.

Sequoi had a 30% stake in You Tube-11.5 million usd now gets
43 times that amount.

This should give us an insight whats behind the deal-CONNECTIONS.

"This week I got an iPhone. This weekend I got four chargers so I can keep it charged everywhere I go and a land line so I can actually make phone calls." -- Facebook CEO Mark Zuckerberg
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