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Google Buys YouTube for $1.65 Billion
Over 30 readers wrote about Google's purchase of YouTube today for $1.65 Billion, as rumored last week. The all-stock transaction is the single largest purchase in the company's 8-year history. The move follows on the heels of Google's convincing Sony and Warner Music to put music videos online for free. Reportedly, YouTube will retain its brand and all its 67 employees, including co-founders Chad Hurley and Steve Chen.
a series of 'tubes?
SO glad that YouTube will now be sheltered by "the good guys" ... assuming they stay the good guys *cautious glance over shoulder*
will video.google.com still exist as it is I wonder?
nothing
The bubble will burst on this purchase. There's too much copyright infringement going on @ Youtube.
hiphop-universe.com
This is so ungoogle. Google builds, not buys. Google indexes, not serves. Google already had a video service.
Google is jumping the shark.
The Bubble is back! Bubble 2.0, but a bubble nonetheless.
Invexi - a Phoenix, AZ based web design and web development company.
Hey google, Thats 24 million dollars each isn't it? I'm a one man company, but you can buy my company (www.positech.co.uk) for just $15 million.
Give me a call, or just drop me an email guys. That figure is negotiable too.
DRM-free indie games for the PC and Mac: Positech Games
Even though they say "YouTube will retain its distinct brand identity" I wonder how much integration they will eventually do with Google Video. Will YouTube videos be search-able on Google Video, for example? Google is usually good at not integrating just for the sake of integrating. For example, Google Analytics still uses a Flash based map instead of the Google Maps API.
Bradley Holt
I know some people won't get why they did this, or how Google will make money from YouTube. I will explain:
First, Google makes money through advertisement. Currently simple text banner ads. But a quick look at other sites will show you a growing interest in video ads. YouTube has a lot of visitors, and if Google plays this correctly they can make more advertisement dollars.
Secondly, YouTube signed some nice contracts with the likes of CBS and two music labels.
True, Warner has embraced it's content for ad revenue, but I'm sure Youtube was treading on a thin edge, and would've had their a55es sued sooner or later.
This will just expedite the inevitable, and I expect Google to quickly unpublish most (C) content to save their a55es. That'll probably reduce it to what Google Videos is right now, fun, but with very limited content.
Goodbye, Youtube, it was a good run while it lasted.
Deep Pockets (TM) invite lawsuits ~GillBates (2006)
An Indian-American Hindu committed to non-violent thought/speech/action alarmed by the global explosion of radical Islam
I keep seeing all these comments about "copyright violations" on youtube... is a 5 minute daily show clip a copyright violation? Is there such a thing as fair use? Does youtube (now google) have some sort of common carrier for video defense they could claim?
I'd like to see some serious commentary on this, and not just the assumption that youtube voilates copyright. I spend probably and hour a week watching stuff on youtube, and I'm sure over 95% of what I see does NOT violate any copyrights.
Is it because Google fumbled around trying to implement some sort of open-standards solution while YouTube built up a userbase with the corporate controlled but much more user friendly Flash format? (Egad, it even uses patented video codecs that Macromedia licensed!)
That's at least part of the answer.
Ouch Slashdot. $1.65 Billion. Ouch.
Does this mean that YouTube will now go into Beta status?
Too, I wonder how google will integrate the two.
Dear Google, Thanks for the 25 million junior bacon cheeseburgers. I hope you like getting sued. -The management
Bury me in mashed potatoes.
The VC's and founders take a larger percent of the total than the rest of the employees. So the $25MM you mention is way off base.
Keep in mind that Google is not paying dollars -- they are trading Google stock for YouTube stock. So even though $1.65b is a scary number, what you should be asking yourself is not whether YT is worth $1.65b, but whether it is worth 1.25% of Google.
What makes you think that the stock is evenly distributed among all the employees? Don't forget that the VC firm also has a big chunk of it (quite possibly the largest chunk). After that, the founders will have the lion's share.
Anyhow, they can't just sell the stock and run. They'll have to wait some specific amount of time before being able to sell.
Although I disagree with this long term, what most people haven't realized is that Google got YouTube for free. On news they might buy last week, their stock rose ~2%. It rose even more today with more news and will probably raise a bit more tomorrow. So, 1.65 billion in stock was given away which is something like 1.5% of the company. If they just increased the companies worth by 5%, did they not just make a profit buy "buying" this company?
Long term it might not turn out that way, but annually this is great.
"If you are a dreamer, a wisher, a liar, A hope-er, a pray-er, a magic bean buyer
That's funny, I had a quick discussion with my co-workers too, and they were of the mind TEN MINUTES AGO that Google needs the following:
c id=16357565c id=16357445
a. the users and more importantly
b. the usage pattern of these users
While google has been picking up little things here and there, essentially this is google's first real "social networking" site that they have purchased. I say it in quotes because youtube isn't really a social networking site, but there are certainly aspects of it that cannot be denied.
I say youtube lucked out and google really made a stupid purchase, it appears to me like it was an attrition attempt against the competition in internet space (yahoo? microsoft? myspace? - whoever they think their competition is atm, because I can't tell). I don't know.. I'm curious to see where this goes. Google definately wants to go into the multimedia distribution area, that's for sure. How they go about doing it, we'll have to see..
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Are you a script? If so you should be changed to reply coherently to replies in your thread, that would be more entertaining. Simply copying posts is a bit dull don't you think?
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A webcast of the conference call can be found at http://investor.google.com/webcast.html in real player and windows media player format. The good part is a few minutes in when they start taking questions.
Most of it is about how each (youtube and google) will contribute to each other. They also talk a bit about financials; why google used stocks instead of cash, what youtube's revenue is, etc. Long webcast, but informative.
"Google video will not go away, ever." - direct quote from the webcast. The only integration the talk about it about google search in youtube but do say they plan to integrate more.
HAVE! It's HAVE, fucktard. How is it possible that you make THREE mistakes with TWO words??
OK, I'm seeing a lot of posts calling this acquisition "stupid" and i'm seeing the word "bubble" a lot. Now, many of these posters may know exactly what they are talking about, they may be far more informed about the business prospects of both companies than I am.
But if you just say "this is stupid" without any analysis of the future earnings of these businesses, you are adding nothing to the discussion.
Consider the following: Google is paying approx. 3.85 million shares of Google for YouTube. What is the value of those shares? Probably less than you think. What kind of competitive advantage does google have to justify such a high P/E ratio? They have the smartest technical people in the valley, and a great culture, those have to be worth something. But I'd argue that thy aren't worth $430 a share. What happens to google.com's traffic once people start using MSN search by default in the IE7 search box? Well, I can't tell you exactly what will happen, but I've got a decent guess. It'll PROBABLY GO DOWN, at least the growth rate. Does this sound like a company that is worth 62 times earnings ($130b by market value)?
I'd argue that if there's a bubble here, it's probably in the price of Google, not the price of YouTube. These things are hard to predict because you don't know exactly how the technology, and the underlying social dynamics of the users, will play out. And yes, the legal issues are thorny and I don't feel qualified to analyze those (though I'm sure Google's lawyers are more than qualified to). But i'd argue that Google ought to be making MORE acquisitons with its stock, not fewer.
None of which explains why Google thinks YouTube is worth $1.65 Billion. There are a lot of big profitable high-tech companies that aren't worth that much. Selling text ads? They don't need to buy the company to do that. Selling video ads? They have their own video technology.
Not that it matters. Google can spend its money its money the way it wants, because it has more than it knows what to do with, and because its stockholders are shut out of corporate decision making. So it can buy companies that have no hope of contributing to the bottom line (Picassa, Outride, lots of blogging and social networking providers). It can hire lots of talented people. (And not so talented. Some of the people who've gone there recently are better at self-hype than actually making stuff.) And it can do this without any concern about making money.
Why is this bad? Because you have a lot of money, resources, and talent being used to subsidize what amounts to high-tech masturbation. Google gets bigger and bigger, and yet they release very few new products. And the products they do release stay in beta mode forever.
And please, don't try to tell me that "beta" is just a marketing or legal gimmick. Products like gmail, Google Groups, and Google Maps have lots of cool features, sure. But they're unpolished, inconsistently implemented, and very poorly documented. But most of all, they lack the boring little features that separate a toy project from a a real product.
Financially, Google is big success. But when it comes to pushing technological progress, they're a ship without a rudder. A very fancy ship, mind you, with free gourmet meals for the crew, and lots of conveniences and gadgets. But where is ship going. Nobody seems to know.
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