What Could YouTube Be Worth?

An anonymous reader writes "C|Net has a story about the possible cost of YouTube. Sony just paid $65 Million for small-time videosharing outfit 'Grouper'. That site has around 1% of the videosharing market. The article asks, at that price, what might YouTube's 43% be worth?" From the article: "Entertainment analysts have predicted in recent weeks that sites with large followings would command a high price. The Sony deal proved them right. But while the Grouper deal helped establish a benchmark, there is still plenty of confusion about the fair value of online video companies. This is because the typical metrics for measuring a company appear to have gone out the window--just like they did during the bubble years of the late 1990s."

Comments

Way to make money ...

[kabz]

Here's my brilliant Web 2.0 business plan:

1. Copy YouTube idea
2. Rename it PornTube
3. ???
4. Profit !!

Re:Way to make money ...

[Red Alastor]

You mean just like xtube is doing ?

http://www.xtube.com/

Re:Way to make money ...

[fury683]

http://www.pornotube.com/

Re:Way to make money ...

[kz45]

I think I should remind everyone that pornotube has 99% gay (male) content.

Re:Way to make money ...

[Anonymous Coward]

Now that's +5, Informative!

Re:Way to make money ...

[jrmiller84]

In other news, XTube.com's user base grows exponentially after a slashdotting.

Re:Way to make money ...

[danfromsb]

Not only is this informative, it is a link to porn!

Re:Way to make money ...

[jimibee]

or http://pornotube.com/ for that matter.

Re:Way to make money ...

[MobileTatsu-NJG]

"I think I should remind everyone that pornotube has 99% gay (male) content."

What'd you think 'tube' meant?

$2,795,000,000

[MarkByers]

Ohhh I love maths questions!

Sony just paid $65 Million for small-time videosharing outfit 'Grouper'. That site has around 1% of the videosharing market. The article asks, at that price, what might YouTube's 43% be worth?

I would think the answer is $65m * 43 = $2,795,000,000.

Re:$2,795,000,000

[Jesterboy]

Too conservative; I'm thinking 5 hojillion.

Dollars.

Canadian dollars.

$65 mil * (43%/1%) = ???

[Tim_sama]

I'm thinking $2.795 Billion.

This is some sort of trick question, right?

It's all relative...

[HMC CS Major]

950M, 650M, 250M, 250K. It's pulling 20gbps of data and has millions of eyes watching ad-ready video players.

It's only worth what it can make in a reasonable amount of time, and that time is growing short as video blogging competitors build their userbases.

Eventually their huge market share will begin being split by competiing sites that slightly beat their technology, and then the value starts to fall...

Done and

[b0r1s]

done!

Wait for the revolution

[CrazyJim1]

Soon, Old Television shows and Movies will be offered on various sites as the rights are given out. Eventually you'll be able to watch any show or Movie that's ever existed. Then after this happens, a connection to your television or special television will be created that will let you watch anything that's every existed at your will.

These amatuer home videos are just the beginning. Eventually all professionally done shows will be available. And maybe there will be an indy uprising of stuff that wouldn't get on TV, but will be seen on the net. Actually that's already happened, but I believe amatuer stuff will become more refined over time.

Re:Wait for the revolution

[a_nonamiss]

You know, when the Internet was invented, people said it would be the end of libraries. There was the idea that you could take every book, magazine, journal, newspaper, etc. ever printed and put it online. And what a grand idea that would be. Then the intellectual property barons came out and put a quick end to that dream. It's sad, really, when you think of what the Internet could have been. A place where all information could be free, and information could transcend the barriers of distance, culture, politics, even language. Instead, everyone came to the party with their hand out, concerned with how they can get the biggest slice of the pie. If this mentality had existed 800 years ago, we'd still be in the dark ages. It would be nice if I could live to see the beginning of the next renaissence.

Re:Wait for the revolution

[Anonymous Coward]

Then the intellectual property barons came out and put a quick end to that dream. It's sad, really, when you think of what the Internet could have been.

But someone has to pay for the tubes!

Re:Wait for the revolution

[Anonymous Coward]

And what a grand idea that would be. Then the intellectual property barons came out and put a quick end to that dream. It's sad, really, when you think of what the Internet could have been.

Wow, and in a perfect world everything would be perfect. While your statement has the "all warm and nice inside" initial feel to it, it really makes absolutely no sense at all. What is it that occupies our libraries, mostly copyrighted "for profit" material. A great percentage of the material itself would not have been created if it weren't for copyright protection and the profit factor. So you actually thought that all these publishing companies were going to roll over and basically put themselves out of business? One of the reasons why libraries work the way they do is that a very small percentage of the population uses them. Publshers don't feel threatened by the fact that there is a copy of their work in a library, because they know that due to the small number of copies and the general nature of people, only a fairly insignificant amount of sales are lost.

Instead, everyone came to the party with their hand out, concerned with how they can get the biggest slice of the pie. If this mentality had existed 800 years ago, we'd still be in the dark ages.

Exactly which planet are you living on. The profit motive has existed for years and much of it centered around the control and owning of information. If you knew the safest/quickest routes, the location of the natural resources, etc, then you could make some bucks. Quit acting like somehow things are different now than they were in the "good old days".

It would be nice if I could live to see the beginning of the next renaissence.

There is a next renaissence, it's happening right now. Perhaps you're not old enough to know what it was like to get access to information pre-internet, but I am. The ease and amount of information that is just a click (or in realty, a bunch of clicks and searches, and popups, etc) away is truely staggering. The way that my kids do homework and communicate is literally a different world than what I did. Now you're beef seems to be centered around the whole money aspect, which to me is a pity, because you've apparently failed to see the revolution because you're insisting that it be free. I just see the fact that it is there, in some cases free, in some cases you have to pay, but by golly, it's there. Whereas not 20 years ago a significant portion of what's available was simple unattainable in any remotely cheap fashion.

Simple example, pre internet, there was only one place in town I could get the SJ Mercury news and then they only carried the Sunday edition. So I could either spend a significant amount of money to have a mail subscription to it, or just live with the fact that I had to pay a premium to purchase only the Sunday edition. Now I just bop over to sjmercury.com and have at it. I don't get quite 100% of the print copy, but I get access to the info I want.

Re:Wait for the revolution

[cowscows]

The IP folks are certainly being unreasonable, but you're being unreasonable in the opposite direction. The internet has grown and evolved at a pace far beyond anything else of its scale in human history. The so called "information age" is moving at a speed that makes the industrial revolution look like it took eons.

And the neat thing is, there's still plenty of potential in it, and progress continues at this rapid rate. Thinking about what the internet could have been is pretty useless, because there's still lots of opportunity to shape it into what you want. Why are you looking back at it like some 90 year old man who never accomplished his big goals in life. The internet is closer to a little kid, just learning how to interact with the world, with a whole bunch of possibilities to explore.

Lamenting that people are trying to make money off of it is silly as well, because anyone with any sense of history will see that the two things that best drive progress are war and greed. The internet did not take off in the 90's in spite of businesses coming aboard, it took off precisely because businesses were so interested in it. Are there some people out there who are putting their own greed in front of "progress" in a way that might not be beneficial to the rest of us? Sure, but that doesn't mean that we're failing as a whole.

The utopia that you imagine where all information is free is nothing more than an unreasonable fantasy, because discovering, creating, compiling, organizing, and distributing that information requires resources and effort, and not many people can afford to work for free. Information does not, on its own, automatically transcend culture, politics, and language. It'd take a whole lot of effort to make all that work.

I don't think many people in the renaissance were going around offering their services for no charge. Things may have been simpler back then, but people still had to buy food to eat, and clothes to wear. The renaissance was not some golden age where everyone floated around care-free and discussed philosophy and art all day. Today's technology and things like the internet are at least as big a deal as anything that happened during the renaissance. If the changes aren't as apparent to you, consider the relative timescales involved, as well as your own pessimistic attitude towards right now.

Re:Wait for the revolution

[IamTheRealMike]

the intellectual property barons

I think you mean authors, artists, journalists, researchers, software developers etc ... I guess you could consider Joe Blow novelist a "baron" but it's a bit of a stretch.

A place where all information could be free

A common dream amongst people who don't produce information for a living.

The writing's on the wall.... again.

[Anonymous Coward]

dotcom 2.0 crash, here we come! Wheeeee!!!!

I don't know

[Anonymous Coward]

what might YouTube's 43% be worth?

I don't know, but I thought it was higher before I saw this.

Red flag

[LotsOfPhil]

This seems like a warning sign to me. If you don't know how much it's worth and don't see how it can make money, you probably shouldn't spend a billion dollars on it.

there is still plenty of confusion about the fair value of online video companies. This is because the typical metrics for measuring a company appear to have gone out the window--just like they did during the bubble years of the late 1990s.
Nobody knows whether anyone can make money by hosting user-submitted videos. (None of the top standalone companies in the sector has reported profits.)

Youtube may be worth the hardware they run on...

[crazyjeremy]

If Youtube doesn't get some more VC soon to pay their estimated $1mil/month bandwidth costs, they may be worth nothing more than 600 or so servers. http://blog.forret.com/2006/05/youtube-bandwidth-t erabytes-per-day/ Keep in mind that article was written in May... Bubble 2.0 can change a lot in 3 months.

Bubble Business Model?

[Soong]

1. Create internet fad.
2. Get bought out. (Profit!)
3. there is no step 3

Step 2 might be expanded "get bought out by people with more money than understanding of internet fads". But really, after step 2 who cares about step 3? That's for the new owner to worry about.

Re:Bubble Business Model?

[joe_bruin]

Duuuuuude, shut up. You're ruining it for the rest of us. Give me a few more years to ride around on my Razor scooter between the Aeron chairs, developing cool software with no regard to ever making any money, getting company-sponsored lunch and free soda, and collecting worthless stock certificates for IPOs that will never happen. Those of you that missed the bubble the first time around: it's a good time to be an engineer, enjoy it. Find a job where culture is everything. Get a raise every six months. Meet a girl with a nose ring. Do cool shit, work hard, have fun, live it up. Eventually it will all blow over and we'll all have to get the blue out of our hair, so try to enjoy it while it lasts.

Uh waaahhh?

[Mayhem178]

Entertainment analysts have predicted in recent weeks that sites with large followings would command a high price.

In other news, Entertainment analysts also predicted unanimously that tomorrow the sun will rise. Other predictions include that next week will have exactly 1 Monday and that Elvis and Jimmy Hoffa will not be candidates for the 2008 Presidential election.

More at 11.

The word "monetize" gives me the willies...

[untorqued]

but it's a major difference between grouper and YouTube. The folks who created grouper built DRM into their schemes, creating a ready-to-use widget for some big media company to scoop up and plug into their (flawed) strategy. YouTube, not so much. Lotsa eyeballs, but so far just another iteration of
1. Build a ____ sharing site.
2. ???
3. Profit!

Legality

[coop247]

Copyright owners are finally starting to sue YouTube. Interestingly enough they are using the Grokster ruling, that "companies could be liable if they were found to induce the infringement in some manner."

Their terms of use say that users are responsible for any content posted. However, if I had a copyright on something posted I'd rather sue the company worth possibly billions than go through the hassle of hunting down a user.

I haven't really heard about too much of this, so they are probably doing a pretty good job of taking down offending clips, but when lawyers smell money in the water, look out.

Re:Youtube may be worth the hardware they run on..

[imemyself]

Even if YouTube were to go bankrupt tomorrow, someone would still pay *big* bucks for their domain name. Probably someone like Google, Yahoo, or MS.

Revenue sucks, but assets are huge

[postbigbang]

And the first one in a particular market segment that does it right gets a heavy share. Look at the iPlod.... My(gonad)Space... and many other interesting ideas.

The problem: no revenue model for it yet. The great thing: easily understood and manipulated. Now there are many knock-offs, including PornoTube, and so on.

What's it worth? With little intellectual property, not much except in future revenue potential. Some aging media king, like Sony, ought to buy them and lose lots of money on them, like TW did with AOL.

Seriously folks, until a revenue model appears, it's just cool, not worth much

Re:Internet analysts always get it wrong.

[badasscat]

It's WAY TOO EASY to copy what youtube is doing.

People said the same thing about Ebay.

The thing is, while it may be easy to copy the site, what's not so easy is getting people to care. The reason why sites like Ebay and YouTube stay popular over the long-term (and that is my prediction about YouTube - it's only going to get bigger) is that it is a self-sustaining marketplace. In Ebay's case, sellers go where the buyers are, and buyers go where the sellers are. In YouTube's case, same thing - video posters go where the viewers are, and the viewers go where those posting the most video are.

People spend hours just surfing around video there, searching for various things. You can find *anything* on YouTube - it's not just about home movies. I just found David Lynch's short-lived comedy series "On the Air" there a day ago, for example - this is a show I *never* thought I'd see again. I see stuff like this all the time there, and I rarely see similar things elsewhere. It's gotten to the point where if you want to find some piece of video, no matter how obscure, you just immediately go to YouTube because you know it's there. Why even bother with anywhere else?

Of course, YouTube has some potential pitfalls, but then so does all of its competitors. Most of what's on the site is infringing copyright. They have ridiculous bandwidth costs. And the quality is not very good. So it is possible they could fall, but if they do, it won't be because some competitor copied their site and did X thing a little bit better. They're going to have to implode of their own accord or through some legal matter in order to turn over the reigns.

I think you should ask like Emmalina like...

[syousef]

"...because like, you know, like well, it's hard to explain but like it's really good, y'know."

Yes that's enough from some silly teen bimbo shaking her backside on YouTube and thinking she's made a revolutionary discovery.

What's it worth? Very little. Probably a little for the interface, a little for the interface, and a little for the brand name recognition. What will greedy morons pay? Who knows! Stopped trying to predict that during the .com boom. It seems

YouTube is great because of a bit of Flash.

[WoTG]

Really, what made YouTube a success?

IMHO, it's soooo easy to watch the videos and share the videos. It used to be a royal pain to put video on your small or personal website. Real Audio? Windows Media? Quicktime? They were all problem prone. The odds of having those work for more than... oh, 70% of your viewers was slim at best. OS support, plugins working, and having the server side software -- it was all a mess. Never mind the bandwidth requirements. YouTube made it easy. Since more than 90% of people have Flash installed, and Flash video seems idiot proof (to watch), the whole video thing is now practical. Plus YouTube provides the bandwidth, and cut-and-paste HTML for sharing.

In hindsight, it's a simple concept, executed well, and with good timing. That said, I wouldn't spend a billion for it. I don't think people care where they host their videos as long as it's free, quick, and easy. I doubt that many people actually browse YouTube, so switching costs for video sharers and viewers is pretty much zero.

YouTube is worth ZERO dollars

[Agrippa]

No one will buy YouTube because the company that buys them will be the instant winner of hundreds or possibly thousands of copyright lawsuits. Right now there is basically no incentive to sue YouTube because you can't extract much cash from them. But what if Google/Ebay/Yahoo owned YouTube? Well, now you have a nearly bottomless well of cash to go after, and since the offenses would be so trivial to prove, its free money.

Any company with the cash to buy YouTube is going to decide in the long run it isn't worth it.

Re:YouTube is worth ZERO dollars

[poot_rootbeer]

since the offenses would be so trivial to prove, its free money.

It's trivial to prove the existence of copyrighted content on YouTube.

It is not as trivial to prove that YouTube was aware that sharing a particular piece of content was a violation of copyright, or even if it was that YouTube is liable for damages.