WSJ reports Google and YouTube are in acquisition talks

October 6th, 2006 at 9:36 am

YouTube is a fast-moving locomotive, and enlightened folks such as Edgar Bronfman (CEO of Warner Music), Sergey Brin and Larry Page (Google boys) are opting to board the train instead of standing in front of it. Believe it not, these people will be rewarded handsomely for their foresight.

Hey, Mr. Cuban, who’s the “moron” now?

October 6th, 2006 at 9:41 am

“Based on experience with these sort of rumors, I’d put this at 40% likely to be at least partially true. ”

LOL. So not news worthy. Its this type of “reporting” that kills you. ppl come here for news, not rumours.

October 6th, 2006 at 9:43 am

Makes sense to buy for 1 billion+ if they are able to stop a repeat of the fox-myspace ad deal. Why compete with msn, yahoo, ask etc later when they can just own it.

October 6th, 2006 at 9:53 am

Kudos for breaking this one…

October 6th, 2006 at 9:56 am

I agree with Jerome, this is a really great blog. Thanks for breaking the news first.

October 6th, 2006 at 10:12 am

I think Google will not buy Youtube. They just want to spy on Youtube’s business model while they negotiate the fake deal..

Thank you for sharing this story with me !

October 6th, 2006 at 10:24 am

You are just part of the propaganda. All you want is hits to your site. Anyway, what do the above 2 stories have in common?

October 6th, 2006 at 10:37 am

I wish the Google guys all the best. I just hope they continue to concentrate on what they do best. Thanks Google.

October 6th, 2006 at 10:51 am

I don’t understand why some of you think he’s pulling stunts like this because he is losing traffic. On the contrary, his traffic seems to be growing at a very fast pace.

October 6th, 2006 at 11:15 am

Jessep: I dont know about YouTube’s network topology, but Google already has peering agreement and/or presence in many major IX points. The increase in costs should be minimal.

The bigger issue is how to make money off these videos.

October 6th, 2006 at 11:42 am

Its huge
The site is a cash cow for advertisers who pay and those who dont

http://webiztoday.com/wordpress/?p=9

October 6th, 2006 at 12:38 pm

Hard to believe that Google would acquire YouTube. Remember all the rumours about the Napster purchase?

One could argue why buy the milk when you can buy the cow, but Google has clearly invested some signicant time and money into their Video store/site, so why not just strike an advertising deal with them and not cannabilize their own site. Incremental is the name of the game.

October 6th, 2006 at 1:06 pm

I think this is just the begining of a bidding war. I just cannot see companies like Microsoft, Yahoo and even companies like Viacom let Google get more dominant.

October 6th, 2006 at 1:10 pm

Google really wants to be dynamic on video market. Google Video is not that fast growing and a good strategy would certainly to buy competitors in order not to loose it all.

October 6th, 2006 at 2:00 pm

@BlogReader #27

This Web 2.0 blogging has nothing to do with serious journalism, but I still love it. Yellow press 2.0 is great and I cannot wait to read here, which is the next player in talks with Youtube Arrington is doing a great job and he should get paid a few million a year for beating the hell out of Businessweek and Co.

October 6th, 2006 at 2:07 pm

Google is doing a good move to buy Youtube. It is a great to eat up the market and kill all competitors. Plus it will get all that traffic to make more revenue instead of sharing it with YouTube that is doing now.

October 6th, 2006 at 4:17 pm

This story has been doing the rounds awhile, and $1.6bn is a split down the middle of the price ranges I heard.

So, will Google buy all of Web 2.0 or only the very expensive parts of it

October 6th, 2006 at 4:33 pm

There are only a few companies who do not consider the copyright and potential legal troubles as a key issue. Two that come to mind are Google and Microsoft.

In regards to bandwidth, I think both companies can afford to foot the bill and let’s not forget Google is a hardware company too. Companies like eBay could learn a lot from the hardware strategy.

Google has been rapidly expanding their brand in all markets and country’s. It’s working too. YouTube will further compliement this effort as well as force Google into *Media* partnerships which they love. They immediately gain a relationship with Warner and imagine now that the Google brand maybe potentially be behind youTube more media companies will be willing to play the copyright hassle game with Google and youTube.

Just as it was with Skype. Yahoo, Microsoft and other’s may of did some bidding as well. YouTube can easily be transformed into the biggest media delivery vehicle on the web once more partnerships are made with the Movie, TV and Music industries.

October 6th, 2006 at 5:14 pm

“YouTube can easily be transformed into the biggest media delivery vehicle on the web once more partnerships are made with the Movie, TV and Music industries.”

Apparently you’ve never worked with any of these industries. They’re not easy to work with all they have all the leverage in these types of negotiations. The Warner deal is not significant, although the Web 2.0 and YouTube cult seems to think it is. YouTube is paying Warner for their content, so it’s clear who got the better deal. It adds yet another operational cost for YouTube and forces them to monetize.

And, do note that media companies already license their content to other video sites. See:

http://online.wsj.com/public/a.....technorati

Important point:

“People who work in the industry estimate Vivendi SA’s Universal Music Group, the world’s largest recorded music company, earns around $15 million a year, or less than 0.5% of its annual revenue, from hundreds of online video licensees.”

If 100s of other licensees are only generating $15 million for Universal, I think it gives some indication that the monetization of online video is not nearly as easy as some would believe.

“Google has been rapidly expanding their brand in all markets and country’s. It’s working too.”

You’re kidding right? Google is getting trounced in China. Their brand is already strong - but they’re still dependent on AdWords for over 95% of their revenue. Nothing else they’ve done has gained market leading traction and this acquisition would actually show just how incompetent they’ve been outside of search.

October 6th, 2006 at 6:08 pm

Microsoft may kill Google by allowing them buying anyone. Google will overpay for these companies, they will loss large sum of their pocket but still could not buy the whole web 2.0 sites (no one can do it). Google is more threat to other online company like Yahoo, eBay, Amazon than to Microsft. So when everyone are threatened and no one has cash left in pocket, MS can choose to buy these company with less money or to develop their Live services to compete.

October 6th, 2006 at 11:53 pm

Has anyone thought that this rumor might have been spread from this site to other magazines and from other magazines to WSJ, this is what magazines do.

Nobody thought this?

October 7th, 2006 at 3:18 am

Drama 2.0 thank you for the clarifications.

I do work in the “industry” and I know the Google brand very well, especially in china…literally.

The points I made were probably not as clear as they could of been. There were a lot of assumptions made. Companies paying for content licensing and squeezing pennies out of monetization were two of them, that’s basically how most site’s operate currently.

I think we can all agree this new market is evolving and it is still in the early stages.

October 7th, 2006 at 4:34 am

This whole thing smells like an intentional “leak” to drive up bidding price and force others (e.g. Viacom) to jump in. We’ll see what comes of it. My opinion is that the press has been manipulated by YT for quite some time.

October 7th, 2006 at 7:59 am

Given what I know of the way Goog makes money, I can completely understand their interest in acquiring YouTube. What I’m baffled about is how to arrive at a price of $1.6 billion. Is this based on hype, honest valuation metrics, or is this an indication that Goog is having trouble finding places to put their huge cash pile to generate the kind of growth they have to sustain? These aren’t rhetorical - I’d appreciate any enlightenment.

October 7th, 2006 at 10:40 am

@29. What’s true? True that Google will buy YouTube? Where has that been confirmed?

Or are you saying it’s true that it been confirmed that it’s a rumor? If that’s that case, what the hell kind of story is that?

Hell, there are confirmed rumors that Elvis is still alive.

October 7th, 2006 at 12:53 pm

I can see this move of Google to buy YouTube as act of desperation to diversify from one stream revenue business which is slowing down with click fraud and slowing economy on one side and finally sobering thoughts of founders on all crap products they announced which are not working and/or not wanted by anyone on another. I can imaging that after a big battle inside and clear understanding that all very expensive R&D are not bringing NEW PRODUCTS WHICH ARE ADDING to revenue and bottom line they were pushed to make a move which suppose to bring new dimension and advertisement space for monetisation efforts. Will it save GOOGLE from falling short of expectations – I doubt it. Apart from copyright issues fully described by Mark Cuban and others from business point of view this acquisition is wrong at the wrong point in time: YouTube is just a place where people are unloading their video content - it is real “LONG TAIL” staff, 99% of it will be seen just by creator and five other guys maximum. In order to monetise this audience media it will take ages and maybe never be profitable. If I would like to see news I will go to news portal, I will use good video search engine for lectures or similar CONTENT. Apart from hype this 1.6 billion investment will not bring any even middle term (1-3 years) google size meaningful revenues. So we have now very interesting point of Google business development cycle which will be reflected in earnings this and next quarter: no new working ideas from inside, all released products are not material in sense of revenue, strategy is to move into video space and buy out time but there is no clear business idea apart from proposal to advertisers: now we will put your add on every video download (99% is how I am cool dancing or baking or nice place in Zumbaramba). On the margin compression side we will have slowing growth of revenue due to click fraud recognition and slowing economy (not only YAHOO! disease), increasing Capex (now with not clear picture whether any of these investments are actually working) and expense related to options from 1st and 2nd q around 151 mil, so Free Cash Flow will be way below to reflect any sustainable multiple to the current stock price.

http://sufiy.blogspot.com/

October 7th, 2006 at 10:16 pm

The Google YouTube story has turned out to be another TechCrap PR stunt.

October 9th, 2006 at 2:17 pm

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