As many of you know the online video website, YouTube, was the target of a stock buyout by Google to the tune of 1.6 billion dollars. You can stay up to date with this news by following the Google news trail about YouTube.
YouTube successfully beat the video sharing services of Yahoo and Google, attracting more users than both the Internet giants and naturally becoming a target for a takeover. Based on the news of last week, Google was successful after rumours of buyouts from both Yahoo and Microsoft. The big winners here are YouTube’s founders and investors, who received a ton of Google stock for their 18 months work on YouTube and now join the ranks of Internet made billionaires.
I’m not too clued in on the video sharing market but Ken McCarthy’s discussion of the takeover on his blog covers the main points as I see it and is well worth a read.
What I find so exciting about this story is the potential for huge wealth in such a short time. That’s a 1.6 billion dollar deal after only operating for 18 months and showing no profit. That is insane!
What this proves is provided you have the eyeballs – you can attract traffic in uber-huge quantities – you have the formula for wealth online. Yes a profitable business model is important but you don’t necessarily have to be currently making profit to win big. You can almost leave the monetization up to the future owners provided you have a sustainable formula for keeping the traffic coming – as crazy as that sounds.
The YouTube story is a rare case of success at this level but the point to be made is that the Internet is a special industry working with different rules and sometimes, like in this case, capable of operating at hyperspeed – making billionaires in a very short timeframe.
Hey Yaro,
It’s interesting to see the direction Google is taking. Do you think the %1.6 billion US price tag is worth it? I’m a little skeptical as to whether it was a good move on Google’s side.
I mean Google Video had really taken off. In fact I found it more useful than You tube with the UI, tagging features and whatnot.
Robert.
Hi all:
I think it was a good move, with the rumours of Yahoo trying to buy Youtube… in the blink of an eye that’s 30 millions monthly visits less for Adsense that go directly to Overture, a big hit in the Google’s main way of income.
Video is the near-future in Internet, a whole opportunity for Google and his Adsense-Adwords business. I think Google thought very well the deal and sealed very well the pact, with parts that will never go public.
We’ll see, but I think it has been wiser and with more subtle issues than most people thinks.
Regards.
Hi Robert,
I have no idea whether Google overpaid for this one. I like Ken’s discussion of the topic – I agree with a lot of his points.
I think Google is in the best position to monetize YouTube but in some ways I also think Google did this more to be certain none of the other big players did it first.
I personally think google has got a good deal, they have basically built a monopoly on web video content. They have lots of spare bandwidth and advertisers waiting to advertise.
i wish blogger puts up video blogging.i cant wait for you -tube to come on blogger