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.'"

Comments

Free Speech

[eldavojohn]

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.

Re:They are right.

[AutopsyReport]

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.

It Might But It Doesn't Have To

[eldavojohn]

Really, enjoy it while you can, because the record companies will sue YouTube into the ground. Soon.

That's not entirely true.

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.

Re:Web 2.0 ...

[Rob T Firefly]

I'd really love to have seen their pitch to any VC firms

Heh, it seems to me that's the opposite of what they're trying to do. I'd guess they don't want to sell at all, they're willing to stick to their own guns and find a way to make it work. The sponsored contests and recent deal with Warner are steps in that right direction. This whole $1.5B thing seems to be just a way to shut up all the megacorps who have doubtless been peppering them with offers like the rest of us get junk mail.

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.

Re:1.5 huh

[kalirion]

What, exactly, does youtube have that can't be easily copied?

Popularity?

Re:If you consider Yahoo buying Broadcast.com....

[cowscows]

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.