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Google To Buy YouTube?
The WSJ says Google is in talks to but YouTube for $1.6bn. I gather that TechCrunch got the scoop so good for Mike. Blogs rock. I see the WSJ print as affirmation though. When old media and new media agree about something, there must be something there.
It makes a ton of sense for all parties and is sort of an insider deal with Sequoia (the best vc firm in the business right now) on both sides of the deal. Brings to mind John Doerr's comment, "no conflict, no interest."
Google video plus YouTube will make Google a force in online video, which according to Comscore's recent ratings is something they have not been able to do on their own.
The question I am wondering is whether Yahoo and others can let this happen without making a move on YouTube as well.
Chad Hurley and his team have done a great job buiding the best thing to happen to the net in several years. If this happens, they deserve every penny.
Comments (9) | Posted October 6, 2006 in Venture Capital and Technology
Comments
"If this happens, they deserve every penny."
Seriously?
While I admire Chad and the gang for what they've done to make online video so easy to consume and incredibly viral, I'd stop short of saying they deserve every penny when they've built a business on the backs of copyrighted material. Maybe I'm being myopic but I just have a hard time seeing how YouTube is any different from Napster. Both companies pioneered innovative ways to deliver media to customers. And both had businesses that would never have gotten off the ground had they not leveraged material that they didn't own.
Posted by: Jon Bischke | Oct 6, 2006 1:33:17 PM
I'm with you Jon. I've been following youtube before "youtube" was even in our lexicon and I can frankly say, one of the main reasons, youtube became this huge was b/c of NBC. I remember Youtube when it was a mess of code and broken links, with one of the most viewed videos being a guy who travels the world to music. NBC inadvertently put youbtube in the spotlight when they threatened youtube with a lawsuit if they didnt take down the Lazy Sunday sketch from snl. This brought huge publicity to youtube as this aggression from NBC was picked up by every major publication and new outlet. Now people who never even heard of youtube read about it in the paper. May we be so lucky to have our own website written up (even in a negative light) that will add much sought after eyeballs. So to say they deserve every penny, I would disagree. I wouldnt want to say they just got extremely lucky, but... How different would this be if someone were to create a website that allows people to upload any form of music that has an embeddable player. Let's see if you still call the creator an innovator while at the same time every music label is suing him at the same time...
Posted by: Steve | Oct 6, 2006 2:14:30 PM
I tend to agree with Fred; however much this deal (if it pans out) is finally valued at, it may represent the deal of the decade. If Google is willing to discuss buying YouTube, then we have to once and for all recognize that there is real (if somewhat opaque) value in YouTube.
We've heard the Calacanis/Cuban view on YouTube simply stealing other people's content but we have to remember that users can also submit their own videos. I don’t think the Napster comparison is apt because that platform helped popularize mp3s as a standard (not many people were creating and posting their own music, and most didn’t know the mp3 format). I think the online video trend was somewhat established when YouTube came onboard so it's been able to leverage an already present, if nascent, trend of users creating videos. Now maybe those videos mostly resided on their hard drives and YouTube did enable users to post and share them (which hadn’t been possible/simple before) but the content was already there, which wasn't true for mp3s and user-generated mp3s (e.g. mashups) when Napster first hit the scene.
So YouTube has harnessed great tools and interfaces for sharing both copyrighted and user-generated video but its primary function isn't in sharing illegal content. The future is in edge competencies and YouTube definitely straddles the edge between formal content creators (MSM and copyrighted content) and the future of user-generated content (peer production). Read Umair for more on edge competencies.
If the music industry should have learned anything, you don't sue your customers or destroy platforms that they use and crave. Why do we only now have a few legitimate mp3 download services, some eight years after Napster? Because they sued and shutdown a platform that the consumers wanted. The mainstream content owners can make money in the digital age but not by locking up their content behind pay-firewalls or via straightjacket solutions like DRM.
Posted by: Chris H. | Oct 6, 2006 2:36:57 PM
Well thanks to TechCrunch's "unsubstantiated rumor", every entertainment/copyright attorney in LA or NYC now has an an incurable case of priapism (or whatever the female equivalent is).
The only reason YouTube hasn't suffered any major litigation is that YouTube has no real money to pursue; if you add Google to the mix, it becomes a whole 'nother kind of party.
As for Google's suppposed expertise with copyright negotiation -- hah! The experience Google had with print/book publishers is will be child's play when compared to the sheer litigious glee the Film/TV/Music copyright attorneys will unleash if this acquisition should *acually occur*.
Furthermore, Google has done a fairly good job of legitamately licensing content for it's own site, and the audio/video quality is far superior. So why spend $1bn when Google could negaotiate directly with the content licensees directly for far less cash upfront, and far fewer legal hassles?
Eyeballs? User Base?-- hah! (again). It might be useful to ask eBay if in retrospect, the ongoing legal battles/settlements for PayPal (and now Skype) were really worth it. Afterall, isn't eBay now offering GoogleTalk as well as Skype for it's "community"?
Just my .02,
Posted by: hello | Oct 6, 2006 2:50:03 PM
one large risk for youtube is if myspace launches their own video upload/share app, in my view - given how much of youtube's views come thru this channel. google has a possible leg up on yahoo, viacom and other acquirers given their ad deal w/ myspace. they can kindly ask myspace/fox not to launch such a service...just a thot...
Posted by: mark | Oct 6, 2006 3:40:38 PM
the only way this could make sense for google is if they have no confidence in their own ability to create a UI. it seems they specifically designed gvideo to be a hosting service only. yeah, you can leave comments on gvideo, but it's a terrible experience. i don't believe google was that incompetent - it was by design.
also, google video has only been around for what - a year? they keep adding cool and new features, like closed captioning. i'm not buying the 'traffic for legitimacy' reasoning. they would eventually get the traffic on their own. they probably just want to see more of what YouTube is all about to see if they should let it go to Yahoo or one of the others.
Posted by: Peter | Oct 6, 2006 5:02:50 PM
I'm with Fred! They deserve all of it (and probably shouldn't sell unless they lack confidence in their ability to scale the business as well as they've scaled the product)
This isn't Napster. Look at the content. Most of the content and most of the usage isn't commercially copyrighted and if it is - it probably isn't a substitution for other forms of disty. Plus, the DMCA is an EXCELLENT shield and YT complies when copyright holders complain. Napster never tried b/c they WERE built on piracy. P2P was all about FREE MUSIC.
It doesn't matter if YHOO, MSFT, GOOG, MYSPACE, AOL, and 200 other online video start-ups launch video features. Youtube's brand = online video. In the mind of consumers today, it's got the most comprehensive content library and is the #1 place to search, host, and post. Myspace = people. Goog = Search. YHOO = Portal. It's VERY hard to these guys to be something different than their brand.
Posted by: Jeff Schrock | Oct 6, 2006 7:24:15 PM
Google is probably a better fit for the company with its culture. I don't think YouTube founders and team would work well within Yahoo or Microsoft.
Posted by: Simon Cast | Oct 9, 2006 3:37:32 AM
All I know is the content owners who are getting ripped off left and right should be psyched that there are now some deeper pockets to sue.
Kudos to the YouTube founders and investors, but the business model is a function of the content... most of which is ripped off.
Posted by: Grant | Oct 9, 2006 5:20:59 PM
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