Stan Beer
Tuesday, 10 October 2006 13:43
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"Anyone who has followed my 'How to avoid acquisition indigestion' lessons over the last 20 years will know why:
"1 - Google and Youtube share the same DNA.
Google brought the internet to life for many people. Youtube has
brought video sharing to the masses. Both rely on search. This would be
one of the best strategic acquisitions we could imagine.
"2 - Video and social networking is BIG. Google knows that to retain
its lead (and its associated advertising revenues) in search it has to
lead in video too. Google Video has been a bit of a flop. The leader by
a country mile is Youtube.
"3 - A Google/Youtube marriage will result in the most visited websites
in the world - overtaking Yahoo and MSN. How could any advertiser then
resist?
"4 - The $1.5m a month costs of hosting the Youtube site is big bucks
for Youtube but is pocket money for Google. Indeed, the $1.6bn purchase
price is little more than 1% of Google's $126bn market valuation.
Youtube has just 25 employees. No indigestion here then!
"5 - Youtube needs Google for its revenue generating expertise.
"6 - The 'shared DNA' point is made richer when you consider that
Sequoia Capital was an investor in both companies - lucky them!"
According to Holway, with Google in the picture copyright holders would
think long and hard about suing YouTube because of the search giant's
considerable resources.
Anyway, newly announced partnerships with Universal Music Group, Sony
BMG Music Entertainment and CBS to allow artists' music and videos to
be included in original content posted on YouTube's site, the
likelihood a lawsuits is diminishing. The new deals come on the back of
deals already signed previously with Warner Bros and NBC.