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YouTube Won't Sell For Less Than $1.5 Billion
Joel from Sydney writes "According to a report in the New York Post, YouTube has informed potential buyers it won't be sold for anything less than $1.5 billion. The report lists Viacom, Disney, AOL, eBay and News Corp as potential buyers. Given that News Corp purchased MySpace last year for $580 million, is this a realistic figure?" From the article: "YouTube's stated business model is to 'pursue advertising,' but potential advertisers might be skittish considering industry estimates that roughly 90 percent of the content viewed on its site violates copyright laws. And at least one giant, Universal Music, is threatening to sue the company if its artists' songs keep appearing there. As it tries to focus on videos that don't use content owned by media companies, it yesterday launched the YouTube Underground, a contest to 'discover the most talented unsigned bands and musicians on YouTube,' backed by Cingular Wireless, Gibson Guitar and ABC's 'Good Morning America.'"
When you've gotten so big that people are afraid you're controlling free speech and the press, then I don't think $1.5 billion is too much to ask.
Remember, the CEO of News Corp is Rupert Murdoch. Everything you see with the Fox logo is his. Its yearly revenue is around $24 billion. "News Corp" is a nice generic name that no one remembers while it's holdings grow out of control. Whenever you see Fox or Myspace or anything listed in the link above, you should be thinking one thing: "It's all News Corp under the direction of one man."
Pretty scary when you think about it.
My work here is dung.
I'd love to believe that. But given the fact that Yahoo just tendered $900 million for Facebook while leaving much of the company's structure unruffled, one billion or more isn't out of the question for a notorious web service. At least it's getting closer to the $2 billion they really desire.
For he today that sheds his blood with me shall be my brother.
Or, to put it another way, I think there are better alternatives to suing and the record companies have figured this out. When they sued Napster, Kazaa & eDonkey and then started suing users, I don't think their profits went up. I mean, they might have gotten a few million from the companies and a few thousand from the users that year. But they destroyed something that they could have taken advantage of. Most industries would kill for an infrastructure of people acting as their own marketing tools spreading their product around. Now, it was illegal because the product was being copied illegally. But if the record companies could have taken a look at the business model and adapted it to suit their needs and sued for the ability to call the shots instead of just pure cash, I think they would have come out further ahead in the long run.
You see, if the record companies looked at YouTube and tried to drive them in the ground, they'd only be trying to suppress something that has come about naturally. Why don't they just claim what is theirs and demand all the copyrighted material ad revenue goes straight to them? Why don't they try to work something out with YouTube in an attempt to generate a recurring income? I mean, surely YouTube can keep the quality down on the work or restrict it to certain songs so that people will feel compelled to purchase CDs/DVDs, can't they?
I think YouTube is like a wild stallion and the record industry is afraid of it. They can either shoot it dead (but that will just spawn more) or tame it and generate a steady income from it.
My work here is dung.
If someone is insane enough to offer that much, well hot damn! Take the cash and run! Otherwise, they get to go about their business, with a bit more buzz-implied value than before.
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What, exactly, does youtube have that can't be easily copied?
Popularity?
The thing is, the only thing that YouTube has that really isn't trivial to duplicate is mindshare. There's no incredible technology there. It's a decent service, and takes advantage of increases in bandwidth and the amount of digitized content out there, but the only thing that makes it significantly different from any potential competitors is the number of people who've heard of it.
Now, having that mindshare and brand recognition is certainly worth something, but YouTube itself is a prime example of why that's not as important as they think it is. YouTube grew out of nothing so incredibly fast, as have many other big websites, and there's no guarantee that its marketshare will last. If something better comes along, it will be trivial for the populace to move on to that and all but forget about YouTube.
When/if that happens, what is the owner of YouTube left with? A pile of servers full of a bunch of inactive accounts and a crapload of content that they don't actually own. It seems pretty damn risky to spend 1.5 billion dollars on. With that kind of money and a little determination, I'd imagine you could create quite a few impressive YouTube competitors, and maybe come up with something better.
One time I threw a brick at a duck.
Anyone can lose groundswell. MySpace and others were the first in their 'space' and therefore are much tougher to unseat unless they don't sway with the times. And this very site is subject to the same public whimsy. The public is fickle. Unless your value is easily demonstrable, you can be flickred off easily.
And look at Ford, look at Sony, look at a lot of other 'solid' brands that could seemingly do no wrong.... now battling survival.
It's a dream for many to create a market and dominate it. For now, YouTube has it. Others have tried (Veoh as an example) and failed. The formula isn't quite perfect, but with a little bit of tooling, YT could make a ton of entertainment revenue, as well as dominating perceived VoD. Already Warner has done a deal to legitimatize their videos on YT, and others will follow. It's an enviable position to be in.
---- Teach Peace. It's Cheaper Than War.
You're missing another factor - content. Sure, YouTube grew so fast out of nothing but it was a pioneer in that field, so there weren't many other places to upload and share your videos. But, as it started growing with more videos, more people came, and the more people that came, the more videos were uploaded by them. People don't go there because it's just the name. People go there because there are millions of videos on there that they can send their friends. Sure, the technology is easy to duplicate, but it would be a Herculean task to copy all of the videos that make it popular. The barrier to entry into the online video sharing market is huge now because YouTube has the content, and people don't want to jump from site to site saying "Hmm, what site has that new U2 video?"
Don't trust a bull's horn, a doberman's tooth, a runaway horse or me.
Are there any popular (and valuable) web sites out there that aren't "trivial to duplicate"? It's not like you need an advanced degree in particle physics to make an online auction site, or a search engine, or an online bookstore, or a collection of vanity web pages. It's all about the mindshare.
Waltz, nymph, for quick jigs vex Bud.
Well, yeah, there are some. You might be able to write a database and a front end to sell a million different items like Amazon.com does, but can you buy the warehouses to store all those goods, negotiate with all those manufacturers, and hire and organize all the people to stuff that stuff into boxes and send it off?
You can probably write a backend to organize and display breaking news stories, but can you organize, motivate, and edit for a large group of journalists out trying to discover new information?
It's less about what a website's servers do when you request a page, and more about the information/content/resources that those servers are drawing from. My point about YouTube is that there's nothing special about their content, it's not exclusive, they don't own it, and they're entirely reliant on their customers for it. It's a nice business model when you can get your customers to do most of your work for you, but you have to keep in mind that people are generally fickle.
One time I threw a brick at a duck.