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GOOG In talks to buy YouTube

Yet more consolidation on the way?

     
4:28 pm on Oct 6, 2006 (gmt 0)

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WSJ Story [online.wsj.com]

Google Inc. is in talks to acquire online video site YouTube Inc. for roughly $1.6 billion, according to a person familiar with the matter. The discussions are still at a sensitive stage and could well break off, this person says.

A spokeswoman for closely held YouTube could not be reached for comment. A Google spokesman said, "We don't comment on rumors and speculation." Rumors of such talks were reported earlier on the TechCrunch blog.

4:45 am on Oct 8, 2006 (gmt 0)

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Who will be the next YouTube? The Web2.0 site have several advantage over the traditional sites. If I have a good ideas and let it come true, maybe next tope site is mine. But, do I have a great idea? Not yet :-(
8:42 am on Oct 8, 2006 (gmt 0)

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<quote>I just hope these guys are a lot brighter than the guys that shelled out the dough during the bubble. </quote>

Don't worry, they're not. :)

9:54 pm on Oct 8, 2006 (gmt 0)

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There's no actual business plan for something like Youtube except to draw lots of visitors and hope someone takes them over. Not exactly a profit centre.
11:01 pm on Oct 8, 2006 (gmt 0)

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There's no actual business plan for something like Youtube

Remember that there was no business plan for Google either but they seemed to make a go of it through advertising. Something tells me they have plans to make money through YouTube one way or another. Companies like Yahoo, Microsoft and Google know the lessons from the first bubble, chief among them: take care of the bottom line. No company that's worth their stock price throws away $1.6 billion.

1:11 am on Oct 9, 2006 (gmt 0)

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Remember that there was no business plan for Google either but they seemed to make a go of it through advertising.

Actually, before advertising, Google syndicated its search results to other sites. Also, the search appliance played a more prominent role.

3:53 am on Oct 9, 2006 (gmt 0)

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What if they allowed users to sign up for a type of AdSense where you can place video ads before your clip

Blecccch. I'd mutiny away so fast it'd make your head spin. The content had better be ultra-rare, unique and absolutely superlative to keep me watching through that kind of wretched invasive blather (at least until/unless some nice coder hacks up a little Firefox extension to nix it)
3:32 pm on Oct 9, 2006 (gmt 0)

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Remember that there was no business plan for Google either

Yeah well Google had the greatest breakthrough in information retreval in 30 years.

Youtube has no breakthough technology, just users and a brand like Friendster had ;)

I'd like to see studies on youtube brand loyalty. I think there are 2 main demos to look at:

1. Youtubers that upload their own videos and have invested a fair amount of time doing so. These folks will be loyal to youtube and view more of the homemade videos.

2. The flipside is the surfer that lurks and views copyrighted material like The Daily Show. These will be harder to keep around if Hollywood gets its act together and stops the pirating.

I'd like to hear the case FOR buying youtube, many of us can easily make the case against it.

3:38 pm on Oct 9, 2006 (gmt 0)

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oen reason why Goog might do it: $1.6 Billion is nothing, especially if they pay with stock (goog is valued north of $130 Billion). They get great press, instant growth, and their shares will rise. Plus, they might even make it work. Worst case scenario they don't recover everything but it maybe worth trying.

Probably google is setting aside (in their mind) ~$100-$200 mil to pay for copyright settlements for those who don't want to sign revenue sharing agreements. That is not much considering the price being paid...just an extra 10% premium.

To add: Goog has a LOT more leverage to make content companies agree to post their content as suppose to Youtube alone.

[edited by: walkman at 4:01 pm (utc) on Oct. 9, 2006]

3:44 pm on Oct 9, 2006 (gmt 0)

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There's actually no problem with one 'bubble' company buying another.

If, say google were hopelessly overspriced at $100 per share, buying a hopelessly overpriced start up at $10 per share, that would translate to a fair-priced Google at $10 buying a fair-priced start-up at $1.00

The problem comes when bubble and non-bubble meet - like hopelessly overpriced AOL buying Time-Warner just before the bubble burst.

If you want the evidence to support my theory, I refer you to Star Trek [matter vs antimatter], reprised by Dan Brown [Angels and Demons]. Works for me :)

3:46 pm on Oct 9, 2006 (gmt 0)

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Yp, that's why "real" companies are having a hard time with the price. They have been in business for 50+ years, and they are lucky if their stock moves 5% a year. Not so with Google.
4:18 pm on Oct 9, 2006 (gmt 0)

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"why visit youtube? To see some dopey teen tell us show his day was?"

Oddly or sadly this is why the venue is so popular and sticky! It's the community (and market share) Google is after.
They blew their chance at MySpace and won't make the same mistake here.

4:57 pm on Oct 9, 2006 (gmt 0)

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I am interested in why people think YouTube isn't worth buying at 1.6b?

If Google does buy it at that price - I think we will look back on it as the Google deal of the century (and the century is pretty darn young).

Cable and direct TV continues to expand it's channel offering. I now get around 210 channels on my home system. It is still *not* giving me entirely the content I want. I have gone to broadcast.com time-n-time again to listen to some games I could not get. With the advent of YouTube and video - there is no reason all that can't come direct on to my desktop.

Consider the ramifications of a video explosion we have not seen since the 60's. We can not get - not just our local news channels - but all the local news channels from the entire world. Pause and think hard about how much video content on the local level, you never get exposed too, that you just might like too? Hundred of thousands upon millions of hours of video content people.

If there were ever a killer application of the future that is percolating up right now - it is video. This is convergence 101 class and Google is about to ace the final. They might just be able to control the entire future of online video and content with a YouTube acquisition.

> There's no actual business plan for something like Youtube

Sure there is - ads on the front - in the middle and on the end. They are already doing on a lot of video sites.

> Google just launched G Videos, so why would they need YouTube.

Because YouTube is getting 1000x the traffic that google video is at this. Branding and product loyalty - YouTube has already won the war.

5:10 pm on Oct 9, 2006 (gmt 0)

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IMHO Internet is too much in an early stage to announce Youtube as the winner of the online video game.

The real action will come when online communities from China & India join the fun.... (that's oh about 1 billion internet users after about 10 years) till then it's all about making money short term from US based community sites :-)

Google just wants an American distribution channel for its advertising product Adsense and is thinking shortterm on how to make more money from American visitors.

BTW Rupert Murdoch thinks about 10 years ahead and therefore his wife just recently headed to China to convince the commies to get Myspace into China but that's not going to happen as Myspace is all about internet freedom.

Next stop for Rupert Murdoch and Yahoo etc will be India after about 2-3 years.

Guys here who want to take the risk should look ahead 10 years and see where the main audience will be coming from. It's not going to be American or European visitors it's going to be from places like Asia. I agree the money these audiences will fork out will be a fraction of what American audiences can pay but in the end volume will matter.

Just my 2 cents worth... we are loving the internet game!

5:12 pm on Oct 9, 2006 (gmt 0)

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The nature of the internet - esp. the teen market - means that Big Boys cannot start trendy new successful sites - they are the establishment. (I'd be interested if someone can name an exception - but it doesn't destroy the argument).

And the Big Boys HAVE to buy the start-ups, for two reasons:

1. Market share
2. To prevent their rivals getting their sticky mitts on them.

And the Big Boys thus create a Market of Fear with silly prices, some of which they will live to regret. In each session of buyouts, first in gets the bargain (MySpace and Murdoch) the others stump up whatever they have to. And the saddoes (Looksmug, etc, pick up the scraps and 'also rans'). There Is No Alternative.

Then the new sites fade gently until a new SupaSite comes along, and Murdoch (or another aggressive risk taker) reaches for the check book ... and the whole sad process starts over ...

[edited by: Quadrille at 5:14 pm (utc) on Oct. 9, 2006]

5:18 pm on Oct 9, 2006 (gmt 0)

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What if some new startup comes up like betterTube.com with 1:100 video compression technology and same interface and feature set?

They grab 100 million users in 6 months flat and youtube is down the drain along with myspace.

What then is more important in terms of intellectual property in Internet?

5:35 pm on Oct 9, 2006 (gmt 0)

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>>>I am interested in why people think YouTube isn't worth buying at 1.6b?<<<

why would a business that's never made a profit be worth 1.6b? would you invest your retirement in it?

i'd be interested to hear why you believe that napster is so much different from youtube... people can easily download and save those stolen vids, which is a direct copyright violation... at the minimum, youtube needs drm to stop that from happening.

the other issue is the lack of quality, professional content... or perhaps it's an extension of the dumbing down of modern television?

5:47 pm on Oct 9, 2006 (gmt 0)

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>> why would a business that's never made a profit be worth 1.6b? would you invest your retirement in it?

First, google isn't investing everything on them, just $1.6 Billion worth of their (IMO) inflated shares.

6:16 pm on Oct 9, 2006 (gmt 0)

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"First, google isn't investing everything on them, just $1.6 Billion worth of their (IMO) inflated shares."

and that's the point as I see it. The money is from shareholders. No risk really as long as the acquisition maintains its market share.
If it takes a dump like Orcut then you could hear some grumbling. Like a previous poster noted the markets they will sell this to are the youth using it now and the Indian and Chinese users in the future.
I am very surprised Yahoo is not chiming in with a counter offer.

6:27 pm on Oct 9, 2006 (gmt 0)

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It ain't over till it's over - but history favours Murdoch - in and out before people realise the value, and it favours Google - good track record of innovation, often allows / encourages founding to teams to stay and become 'family'.

M$N and Y!, by contrast, have a reputation for homogenizing and assimilating and dominating in a Borg-like way.

That may well raise the price they need to pay, especially to someone who's slogan is "We're Not Selling".

[edited by: Quadrille at 6:27 pm (utc) on Oct. 9, 2006]

7:06 pm on Oct 9, 2006 (gmt 0)

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since the money is from shareholders, it's going to be somebodys retirement $$$... do you own google stock?

according to mediapost, we'll have an answer by the end of today on whether or not the deal is done... they also reported that merrill lynch kinda likes the deal, for whatever that is worth.

7:23 pm on Oct 9, 2006 (gmt 0)

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>> since the money is from shareholders, it's going to be somebodys retirement $$$... do you own google stock?

Once again, Goog is investing ~1% of their market cap in them, not 50% or 75%. So even if someone has 100% of their retirement on Goog (a truly stupid thing to do) they're only risking 1 or %.

Second, if you don't like how google runs their company SELL their shares--it's actually up right now because of the rumors. Ironic, isn't it?

8:19 pm on Oct 9, 2006 (gmt 0)

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Google just bought youtube for 1.65 bil (stock for stock).

[edited by: Hunter at 8:21 pm (utc) on Oct. 9, 2006]

8:30 pm on Oct 9, 2006 (gmt 0)

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hmm they realy own the whole net soon and I dont think its that much worth.
8:55 pm on Oct 9, 2006 (gmt 0)

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another to look at it: Goog is paying close to $1 Billion to Fox for myspace advertising and one has to assume that G hopes to make at least 10%-20% in profit too, so there is money there. If they can monetize myspace...why can't they figure out how to monetize youtube and essentially get it for free after 2-3 years?

Plus, Google just printed out a few more shares, not real cash :)

Specualtion time: how much did the two founder end up with? I'd say that they kept ~25% each after all the VC money was raised.

9:15 pm on Oct 9, 2006 (gmt 0)

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It's Done: Google Buys YouTube:
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