Rumor Of The Week: Google To Buy YouTube
TechCrunch's Michael Arrington rates his own rumor at about 40 percent likely, just so we get that out of the way. The "completely unsubstantiated" rumor is that Google is finalizing talks to acquire web video phenomenon YouTube.
Arrington received the information via email, confirmed the rumor and the price ($1.6 billion) with venture capitalist firm Sand Hill Road. Earlier reports have valued YouTube, which streams about 100 million videos per day, as high as $2 billion, even with its million-dollar-per-month bandwidth fees.
The commentators at TechCrunch are split on the rumor, some calling it "ludicrous," others exploring the possibilities of why it would make sense for Google to acquire YouTube. The first thought, at least from here, is that Google has to do something with all that cash.
"Google is sitting on huge amounts of cash," says Sebastian Borek, "their shareholders demand Google to continue their story. Also the Internet is a winner take it all business, that by nature drives consolidation of the market - sometimes earlier then expected."
It's no secret that Google has been moving from search engine company to media company, and controlling a market like the one YouTube commands would play straight into that strategy. Adding YouTube to Google Video would give Google tremendous video market share, adding to their search dominance.
Some wonder if Google would be willing to take on the potential copyright nightmares that come with YouTube, and how long after acquisition that lawsuits began pouring in, considering Google's cash mound.
Arrington admits that these rumors usually turn out to be false, but feels it is his duty to report when major VC firms are buzzing about something.
Though some question the value of YouTube, the company itself is said to have set a $2 billion price tag. Why the discount, if this is true? MySpace and Yahoo are overtaking the video scene (another reason for Google's interest in video), which puts YouTube in third place among video sites.
Commentator Jason L. Baptiste brings Apple into the equation, and presents his own theory:
1) google buys youtube
2) youtube and google deploy video adwords ie- contextual/"vidtextual" ads postroll, monetizing the content.
3) google delivers youtube via Apple's iTV, to get it to people on their tv.
"We were all calling News Corp. idiots for buying MySpace a year ago," said Baptiste, "now it's a steal."
Google, YouTube
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