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YouTube Tries On The Skype Billion Dollar Buyout Plan For Size

from the hype-hype-hype dept

Mon, Jul 24th 2006 4:20pm — Mike Masnick

A year ago, we were amazed at how Skype's founders and investors more or less manipulated the press into claiming the company (which had made very little money) was worth $1 billion, then $3 billion just a short while later, only to end up at $4.1 billion only a couple months later. The numbers are hard to justify no matter how you look at it, but press hype (fed eagerly by the investors) worked like a charm until someone coughed up that huge amount. Earlier this year, it looked like Facebook was trying the same strategy -- except they started at $2 billion, despite the fact that their larger competitor, MySpace, was bought only a few months earlier for $580 million. It appears that $2 billion may have been a bit too high to start in this game. $1 billion works much better. So, almost exactly a year after Skype first pulled their $1 billion number out of a hat, here comes the press claiming that YouTube (with barely any revenue and huge bandwidth bills) is now worth $1 billion. How long will it be until we see that number jump higher and higher until someone drastically overpays? Perhaps instead of starting new businesses (that compete with YouTube), Skype's founders should just consult other hot startups on how to maximize the insanity right before selling out.

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19 Comments

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I'm in..., 24 Jul 2006 @ 4:30pm

For the big #1. Or First Post for you losers!
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Xcetron, 24 Jul 2006 @ 4:41pm

This is like a chance to make money like the gold rush.
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Oh Yeah, 24 Jul 2006 @ 4:58pm

Before all you whiners roll in with your useless comments about the first post, I'm number 3!

Get a life you wannabe geeks!
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Swati, 24 Jul 2006 @ 5:09pm

It's like the bigger your bill, the more they are worth.

I'm starting a site that gives a thousand dollars. Maybe that'll get me a few billion dollars.
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Anonymous Coward, 24 Jul 2006 @ 6:22pm

Actually having recently spent some time trolling through youtube, a site called albinoblacksheep.com, and google videos I could easily see Google buying youtube and still find a way to make a profit off it.
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John, 24 Jul 2006 @ 6:25pm

1/2 a billion would be too much
That's just silly. I was just at their site last night and I stopped looking at the videos for a moment and wondered "how are they making money here?" I left thinking, well it's simple, they are not.

Eye balls alone does not = revenue. They have huge bandwidth bills and even if it was filled with ads, they wouldn't get much for them as there would be so few clicks.

Even Google doesn't want their AdWords ads on MySpace... neither does Yahoo want their ads. Way too many ads to serve up and simply too few clicks.
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some geek, 24 Jul 2006 @ 6:51pm

As a network admin and small business owner, I *almost* feel bad every time i watch a video and send the link around. I can just feel the bandwith counters clicking away.

However, I still watch and share since a) they knew what they are doing and b) for the moment, they still want me to do this (lord knows why exactly)
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Fred, 24 Jul 2006 @ 7:25pm

Offering content with no direction
These content providers do not have any direction. they host content for the massess, with little or no segmentation. They let users segment themselves by allowing them to chose what they want to see.

Their contracts with web analytics providers like coremetrics and omniture are huge (those companies charge based on page views)... they employ people to look at these massive amounts of statistics and segmentations opportunities. Yet, they do nothing with it.

MySpace, for example, with it's 58 million users, allows one to insert date of birth, location, schools attended, jobs, personal interests, gender, zipcode, general interests, books, movies, etc... they have SOOOOO much information on a person, yet, they still offer silly ads for personals, and for MySpace parties in Denver, Colorado (I'm in NY and my profile says "IN A RELATIONSHIP"..... you idiots!!!!!)

So, their potential is great, indeed. But they do nothing with it. Potential is worth something, yes, but even after MySpace was bought out, nothing has happened...
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Dan Zen, 24 Jul 2006 @ 8:48pm

One word... pro
That's what Flickr did and I can see it working with video hosting even better. They just don't want to scare away people right now... getting us used to it...

Dan Zen
http://www.danzen.com
http://www.zenvlog.com
http://www.zenmix.com
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Skibare, 24 Jul 2006 @ 9:02pm

the Way to Capitalize is going to be Seen on Level
youTube.com is one of 225 present Video Downloading NEW companies and most ride on the Level3 Network===check the Transport Numbers and INCREASE quarter over quarter!
skibare
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Anonymous Coward, 24 Jul 2006 @ 11:12pm

Re: One word... pro
I agree this might be the way to go. A lot of software companies offer a free version (say Zonealarm for example) and then later offer a "pro" version with more content. Once the user base is large enough and the content sufficient to meet the demand, there will certainly be people willing to pay for premium content (say if Kevin Smith wanted to offer a sneak peek of Clerks II for example). I've seen videos that have gotten hundreds of thousands or even millions of views that I'm sure people would be willing to pay a small monthly fee to be able to access (although given how the music and entertainment industry work they'd find a model that assures nobody would participate if left in their hands).
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Faceless, 25 Jul 2006 @ 11:55am

Owners?
To re: One word..pro,

Kevin Smith does not have the rights to distribute his films in such a manner, MGM does as it paid for that exclusive right. Furthermore, cinema owners would not pick up a film that had a "sneak preview" on the web as it underminds their ability to screen the film on the big screen.

It's amazing that people who are supposedly are Digital Media mavens, don't realize how content production and distribution works in the real world. There's a very entrenched production/distribution/exhibition chain that will take a long time to fully disrupt. It's not going to happen in 6 months over YouTube.

Don't believe the hype.
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jiyocricket, 25 Jul 2006 @ 12:18pm

sharing revenue
I think if youtube provides a fraction of their $$ to the uploaders, they will be unsurmountable Jiyocricket videos has been raking in audiences just by linking to youtub feeds
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E Z man, 25 Jul 2006 @ 7:19pm

broadcast.com
Mark Cuban made a bundle off that stinker worthlesss site too.

I bet members of the press have some invested options.
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sean, 28 Jul 2006 @ 8:13am

Re: 1/2 a billion would be too much
Agreed. As one that one that manages Interactive Marketing with Internet as one of many channels it leaves you wondering. On the other hand you can see how companies are saving money sending links off their own site to pull from videos on youtube.com saving the company that should pay bandwidth alot of cash.
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sean, 28 Jul 2006 @ 10:08am

Re: 1/2 a billion would be too much
Agreed. As one that one that manages Interactive Marketing with Internet as one of many channels it leaves you wondering. On the other hand you can see how companies are saving money sending links off their own site to pull from videos on youtube.com saving the company that should pay bandwidth alot of cash.
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Byron Kiing, 7 Oct 2007 @ 6:28pm

Re: to save you all
simply put apease me, give me or displease me
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