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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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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.




"Spreading the rumors, it's very easy because the people who write about Apple want that story, and you can claim its credible because you spoke to someone at Apple." -- Investment guru Jim Cramer

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