News that Google has bought video-sharing website YouTube has set the blogs chattering. Among the questions being asked are how the deal will affect the two companies, what the copyright implications will be and whether Yahoo will follow suit with a similar deal.
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It will be interesting to see what happens next and what happens in the copyright world. I still think Google Lawyers will be a busy, busy bunch. I don't think you can sue Google into oblivion, but as others have mentioned, if Google gets nailed one single time for copyright violation, there are going to be more shareholder lawsuits to go with the pile on copyright suits that follow.
I think there will be subpoenas to get the names of YouTube and Google Video users. Lots of them as those copyright owners not part of the gravy train go after both Google and their users for infringement.
It will be interesting to see how this impacts DRM (Digital Rights Management). As it stands now, there is no DRM on all that video being offered from Google or YouTube. Millions of copyrighted videos that their owners spent a boatload to copyprotect that is available to everyone and everyone without it.
This went from rumour to reality incredibly fast.
Notes from the conference call:
Eric Schmidt, Google's CEO, Chad Hurley, YouTube's CEO, David Drummond, Google's General Counsel and others are on the call. Eric is starting the call and immediately started talking about the content deals announced today.
He says Chad Hurley and Steven Chen, YouTube's founders, remind him of Larry and Sergey.
Chad is now talking about the reasons he agreed to be acquired by Google.
He says Google's ad platform will integrate perfectly into YouTube. Says the cultures are very similar. Steven Chen is now talking, saying that Google's platform combined with YouTube's "innovative technology" is a perfect match.
Sergey says "Google's mission is to organise the worlds information and video is an important part of the worlds information". Says Google's core strength is search and advertising.
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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 $1.65bn.
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.
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.
Will this work out for Google? I think it will. First of all, it makes Google a more interesting company to watch. Second of all, it makes it very clear to advertisers that Google is in the video business big time. This has caught the attention of all the big media buyers at places like General Motors and Procter and Gamble. These folks spend billions on advertising.
Now, will Google get sued over and over? Probably. But if you think that matters then you are missing the point. Did Microsoft's legal troubles slow down its cash generation machines? No. Neither will Google's. Plus, Google has demonstrated it's fairly adept at working out deals with folks who produce content, or own it. Yeah, they'll probably lose a few battles in court, but that's like losing a battle or two but winning the war.
1: Sequoia Capital, which invested about $11.5 m (£6.18m) in two rounds and owned 30% of the company, which translates to about $495m (£266m).
2: Steve, Chad, and Jawed - the three co-founders of YouTube, who must be walking away with at least $200m (£107m) each. They own close to 50% of the company
3: Facebook, because now we can expect a knee jerk reaction from someone, probably Yahoo.
4: Ferrari dealerships, cat litter companies and of course, the real estate brokers.
5: Litigation lawyers
6: Michael Arrington (TechCrunch founder who predicted the merger)
7: MC Hammer, who visited both Google and YouTube last year. Or as he sings - Can't touch this!
1.Yahoo, which is now going to make a move
2.:Mark Cuban (a blogger who said the reported merger was crazy)
4: Google, because I think this is a Skype-eBay kind of a deal for them in the long run.