Google Decides YouTube Is Worth $1.65 Billion In Play Money Plus Any Additional Legal Hassles

from the they-did-it dept

Mon, Oct 9th 2006 2:47pm — Joseph Weisenthal

After a lot of rumors over the past few days, Google and YouTube made it official, as the online-video site has sold out for $1.65 billion in Google stock. The sale represents the successful execution of the Skype strategy of using the media to seed the idea that the company was worth so much. Seeing as Google spends so much already on its infrastructure and bandwidth, this should put to rest any discussion of how much it costs YouTube to host all those videos. The next worry, of course, is making nice with the content owners, something that the company been pursuing actively. Just today, the site signed deals with Universal, CBS, and Sony BMG. The challenge is not just to get the entertainment companies on board, but to do it in such a way that allows YouTube to remain cool; this was what Napster failed to do when it went legit. Obviously, $1.65 billion is a high price to pay for a young company with an uncertain outlook, but it's known that Google sees big things for online video, and so far hasn't had much success in the space. There's bound to be a lot of pundits giving their thumbs up or thumbs down to the deal. One of the most outspoken on YouTube is Mark Cuban, who of course has a lot of experience with billion-dollar buyouts of video companies. He said this weekend that this deal would be beyond moronic, and that Google can expect scads of lawsuits, not necessarily from big content companies, but from small copyright owners looking for somebody to sue. Now we get our chance to see if he's correct.

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29 Comments

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Cleverboy, 9 Oct 2006 @ 3:04pm

Fu, fun, fun...
This will be interesting to see if all the omnious predictions come true. YouTube was supposedly in post-mortem without a clue, but now... its somewhere else. YouTube previously limited uploads to 10 mins, while Google isn't so limited. Clearly the branding will remain, but will many of these other decisions?
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Steve E, 9 Oct 2006 @ 3:18pm

Will be interesting to see if the lawsuits flood in now the lawyers know YouTube have the backing to pay up ;) Google better monetize this one asap!
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Petréa Mitchell, 9 Oct 2006 @ 3:34pm

Format wars, copyrights, etc.
Do you suppose Google sees this as a way to force everyone to adopt the Google Video file format? Are we going to hear tomorrow about a plan to upload and index every library-held video in the world? (Google vs. the MPAA and RIAA, now there's an apocalyptic battle I'd love to watch...)
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MadJo (profile), 9 Oct 2006 @ 3:43pm

Hmmm, interesting
okay, so I was wrong in thinking that Google would not go that way. I really thought the chance of this happening was 0.1%, I guess I should never play in any lottery ;-)

Indeed, interesting developments.
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Heros Calling, 9 Oct 2006 @ 3:46pm

Of course, there's been no real confirmation that the talks are actually occuring, or that Google's even interested in buying YouTube, but why should that matter?
It matters because they proved to be true. You (TechDirt) decied that you were smarter that these other legitimate news agencies (WSJ) and led your readers to beleive it was all hogwash. I guess you're not as smart as you pretend to be. Just another second-rate blog.
Google could be buying YouTube -- after all, when you use $400 shares of stock for toilet paper, what's $1.6 billion? But the evidence still seems a bit flimsy and we'd rather the discussion about the acquisition happen, you know, after the acquisition.
I'd say that the fact that you (TechDirt) allow comments to your "stories" proves that you really wouldn't rather the discussion happen after the aquisition. In fact, you thrive on it happening before.
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Paul, 9 Oct 2006 @ 3:47pm

we've been joking for years, but..
I really think Google is going to become SkyNet.
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Anonymous Coward, 9 Oct 2006 @ 3:48pm

Re: Hmmm, interesting
You werent wrong. That's the way it was presented by techdirt.
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DittoBox, 9 Oct 2006 @ 4:01pm

Up 8 whole smacks!
The GOOG stock is up a whole 2.02 points, for a total of 8.50 per share climb.

Is that why they bought, to make the stock price artificially inflate? There's no reason otherwise, other than to capture a massive user-base, that's likely really finicky, and will be difficult to easily monetize?
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Anonymous Coward, 9 Oct 2006 @ 4:23pm

I Concur!
I concur with Steve E. I think the lawyers of content have been drooling over this long enough that the shorter ones have drowned.
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Anonymous Coward, 9 Oct 2006 @ 4:26pm

Someone mark your calendars
Today was the day I completely realized that NO company's intelligence can survive the braindrain that occurs from taking ones company public.

Sorry, this is a completely absurd thing for google to do. I uh.. yeah. thats just sad.
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FreeHear, 9 Oct 2006 @ 4:45pm

Re: Someone mark your calendars
Anonymous Coward wrote:
Sorry, this is a completely absurd thing for google to do.
I uh.. yeah. thats just sad.
If you weren't an Anonymous Coward, it'd be interesting to see how well you words held up years from now. What'd you think of the MySpace purchase? I guess I'll have to settle for Mark Cuban and his "moron" statements. Apparently Google is run by "morons". I'm betting you both turn out to be wrong. If nothing else, the founders of Youtube are hitching their wagon to Google, and sink, swim, or fly... the future is what they make it.

--Me? Once upon a time, we'll say... people had to buy separate services called Internet, phone, and cable television. Then... it all just became "the Internet", and all the other services became part of that. I'm thinking its going to be all about iTV's and the next generation of streaming Internet television networks. --Go Revision3! I was amused by a story I heard of one entrepreneur that wanted to reserve a satellite station for a "Puppy Channel"... 24 hours of "puppies" running around doing their thing. No talking. No humans. Just puppies. Needless to say he didn't get his space.

--But, welcome to Internet broadcasting where its all on the dime of companies like Google, where all things may well be possible, and the puppy channel may be coming to a click near you. Can you dig it?
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DamnFool, 9 Oct 2006 @ 5:03pm

Mark Cuban
Mark Cuban is a complete fucking moron!!! Anyone who has spent more than 2 minutes listening to his over inflated ego, and bullshit spewing from his mouth knows this!!!! I say, SOOOO WHAT!!! Google is doing something they think will make money, and NO ONE can argue that they have done VERY WELL in that area. Screw all you nay sayers!!!
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Anonymous Coward, 9 Oct 2006 @ 5:55pm

Re: Re: Someone mark your calendars
--But, welcome to Internet broadcasting where its all on the dime of companies like Google, where all things may well be possible, and the puppy channel may be coming to a click near you. Can you dig it?

Of course, I can dg that. but... WTF does youtube have to do with it? that can already happen with google video.

Google failed to achieve critical mass with google video by being "better" than everyone else (which is how they attained critical mass in all of their other ventures). but instead of innovating themselves ahead of youtube, they went and bought someone who was losing money. THEY BOUGHT THE AUDIENCE.

This is the first time I have seen google pull an asinine stunt like this. They already had everything they needed to outmaneuver youtube, but they failed.

As for your insight into myspace... it still doesnt know how to make money. its getting there... and its masses are leaving. so uh.. lets see how "you" feel about it in a year.
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JustMe, 9 Oct 2006 @ 6:25pm

Re: Re: Re: Someone mark your calendars
As far as buying what they couldnt do themselves...Microsoft does it all the time and they own half the planet. Seems to work for them. Why not Google?
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JJ, 9 Oct 2006 @ 6:34pm

Re:
> It matters because they proved to be true. You (TechDirt) decied that you were smarter that these other legitimate news agencies (WSJ) and led your readers to beleive it was all hogwash.

Actually, all TechDirt did was point out that there didn't seem to be much proof, and all of the talk seemed to point at the same anonymous sources, and then link to each other as proof. That was true. They never said it was hogwash, just that the growing speculation all seemed to be built on the backs of each other rather than any new evidence. If you read the original post, TechDirt was clear that the deal could b ehappening. I read it not as a statement on whether the deal was happening, but how the press reported it.

> I'd say that the fact that you (TechDirt) allow comments to your "stories" proves that you really wouldn't rather the discussion happen after the aquisition. In fact, you thrive on it happening before.

Again, that's not how I believe that post was put up. Carlo was focused on the press coverage, which had nothing to do with whether or not the deal was actually happening.
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Anonymous Coward, 9 Oct 2006 @ 7:02pm

But, if it's in the WSJ, it must be true, right?

Come on, Techdirt blew the call. You can argue semantics, but thats all it is. Techdirt posted thier article, and it was wrong.

Course, mistakes happen, but don't hold others to a higher standard than yourself, that is, if you really believe the hype that reporter citizens and blogs can actually report the news.
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Anonymous Coward, 9 Oct 2006 @ 7:03pm

Re: Fu, fun, fun...
You tube allows more than 10 min of video to be uploaded, i watch my southpark episodes on the site tehy runn 22-24min a piece.
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zarquon, 9 Oct 2006 @ 7:17pm

Re: Format wars, copyrights, etc.
greasemonkey lets me download google videos in .mpg
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Mike Mixer, 9 Oct 2006 @ 7:48pm

Re: Mark Cuban
Mark Cuban does't speak out of had or unwisely, i fact he says what needs to be said when others won't and points out absurdities that need to be addressed and we should all try to emulate his genius.
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Jack Ryan, 9 Oct 2006 @ 8:05pm

WHERE'S MY CUT!!!
HEY!! I uploaded videos to YouTube and those SOBs are making money with my stuff!!! Where's my cut?? Is this the future of user generated content? User's upload so the YouTube's can get rich?

How about ME TOO YOU TUBE!!
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Cleverboy, 9 Oct 2006 @ 8:06pm

Re: Re: Fun, fun, fun...
You tube allows more than 10 min of video to be uploaded

Hate to disagree... Actually, I broke the story on Digg from YouTube's blog when they first announced the change due to assumptions about how this may help to limit infringment.
[Downgrades Feature to Prevent Copyright Violations]

http://www.youtube.com/my_videos_upload
Read the text carefully below "Upload Tips". Youtube has been very inconsistant about handling pre-existing content though.

Videos are limited to 10 minutes (unless you're a Director) and 100 MB.
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FreeHear, 9 Oct 2006 @ 8:36pm

Re: Re: Re: Someone mark your calendars
Of course, I can dg that. but... WTF does youtube have to do with it? that can already happen with google video.

We'll have to see what Google does, but from my vantage point, YouTube can remain "YouTube" (sans consolidation) while google benefits from the audience and strategic control. Google knows the numbers involved with YouTube as much as with its own website. As watchers of sites like Digg notice, when comparing it to an cloned offering like Netscape, numbers of "engaged" uses make a significant difference to the quality and possibilities inherent in the portal itself. YouTube users are so enamored and in love, they've written songs about it (my favorite is the one with the stuff animals [click]).

As for your insight into myspace... it still doesnt know how to make money. its getting there... and its masses are leaving. so uh.. lets see how "you" feel about it in a year.
You bet. A friend of mine is also placing bets against MySpace being any form of "player" 5 years from now. My bet...? It will be with shades of difference. Honestly, "Friendster" was a splash in the pan from what I could tell. Things like YouTube and MySpace have achieved a whole other level of attention and media inclusion ( movies, tv, music... you name it, they've appeared in it ).

On a side note, it's kind of ironic that all of these websites seemed to get popularized by attached scandal.
Digg - Paris Hilton's cellphone numbers
YouTube - Massive copyright infringment (Lazy Sunday) and lack of business model
MySpace - Pedophiles and online predators

Maybe Friendster should have tried a little harder to stir up some trouble. They should be ashamed. We certainly know Michael (Lindows/Mp3.com) Robertson gets it.
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Anonymous Coward, 10 Oct 2006 @ 6:51am

OK, just can't resist the comment about Mark Cuban being the best thing since sliced bread.

He is a jerk. He is a rich jerk, but that doesn't make him the end all. Ever watch the NBA draft televised where he got the first pick, then jumped up and started running around like an idiot? He went to high five another former player turned GM and the guy looked at him like he was nuts (since in fact he was a competitor).

Cuban is a loud mouth jerk. Course, that doesn't make him wrong, just a jerk. If you want to style yourself after someone, make it Warren Buffet.
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Drew, 10 Oct 2006 @ 11:19am

Re: Re: Re: Re: Someone mark your calendars
It works for Microsoft because they buy companies that are making a profit, or at least have a very clear business model. That said, if anyone can figure out how to squeeze advertising revenue out of YouTube, it's Google.
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Petri Houston, 11 Oct 2006 @ 2:45am

other acquisitions...?
all Interesting discussion.

I heard that Google is also after some other online video start-ups

So how can YouGoog be an all-in-one online video platform / community... Live video?? ... and social entertainment shows !

that'd be the new MTV right? with reality kind of flavor.

check out the link. i ve just this today. sounds veery interesting.
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nazmul ahsan mukto, 5 Dec 2007 @ 11:06am

About me
I'm a student of 12th class in Bogra Cantonment Public School & College.
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Emad Hassan kenona, 16 May 2008 @ 6:23am

youtube upload videos very heavy
We need google to fin tools or quick upload or download videos fast ,please when and explain.
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