It's Official: Google Buys YouTube

Joseph Laszlo | October 09, 2006, 05:00 PM

I've been resisting posting about the frenzy of speculation around Google/Youtube. In part because it didn't seem terribly helpful to post about speculation, and in part because I didn't think it was very likely to happen. But of course now it has.

Two reasons for my skepticism:

First, Google hasn't historically bought audiences, but that's really all YouTube has. Other sites (Revver, vMix) aim to provide tools or business models to suit content creators. YouTube was an innovative first mover, but is hardly unique now. YouTube's got nothing tech-wise that umpteen other user-created video sites can't replicate. But they do have brand cachet, and, for now, audience. That's what Google's getting for its $1.65B.

Second, why buy when you can partner? If Google wanted to be a bigger part of the very unproven viral video sector, they could've easily done so as a search-and-advertising vendor to YouTube. A partnership, even one with an equity stake, would be nearly instantly profitable, as opposed to a deal that will take years to achieve a return on the investment.

And all this is leaving aside Mark Cuban's concern that YouTube is a giant copyright lawsuit waiting to happen (I don't entirely agree, but he and I seem to be the only ones NOT saying this deal is the best thing since sliced bread).

YouTube faces challenges ahead, and Google's acquisition doesn't change that much. YouTube's user base is not necessarily a loyal one--an audience member can easily view videos from anywhere, and a contributor can fairly easily post videos to other places too. How you take something like YouTube and invest it with the stickiness of, say, an instant messaging network or a MySpace, is a big challenge.

It'll be interesting to see, too, if Google finally starts openly embracing its evolution into a media company/portal, or if it keeps claiming to be purely a technology company. Spending $1.65B for an audience is not the kind of move a tech company makes. Then again, Google, as they love to remind the world, is anything but typical.