Google Buys YouTube



There were a lot of suitors in the mix for this inevitability but in the end, I think Google's the best fit.  Will be interesting to see how this develops from here.  I think part of the reason Big Media never went after YouTube was that it didn't have a lot of capital – why sue a company that's running on $11 million dollars of venture cap funds?  But now?  Google has cash reserves out the wazoo.  Also amazing that YouTube went from nothing to a $1.65 billion dollar company in two years.  (Now why didn't I think of that?)

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Techcrunch » Blog Archive » Google Has Acquired YouTube

[Edit: Mark Cuban, who made his billions selling Broadcast.com, a precursor of YouTube, has some unique thoughts on the implications of this deal.especially on what happens if Big Media doesn't go after Google hard for all the copyright violations on YouTube.  He claims that this could literally be the end of copyright as we know it and hyperbole aside, the fact that YouTube also announced deals with some major media companies today means they'll at least be safer than they were yesterday.  Or maybe Mark Cuban's just mad because he said that Google would be crazy to do this deal two days ago?  Slight tangent but how many other billionaires do you know with blogs?  That's pretty cool, I've got to say.] 

Comments 4

  1. Anonymous wrote:

    This is going to be a very stupid question, but I'm going to ask it anyway. What is the real way in which things like Google and Yahoo and the like make money? Is it publically-traded stocks? Paid advertising? All of the above?
    I've never really understood how exactly it's operated, and, truth be told, I haven't really looked.

    Posted 10 Oct 2006 at 4:13 am
  2. Anonymous wrote:

    Not a stupid question but perhaps an obvious one? Here's the first Google result for “How does Google make money?” from the Google Investor web site.
    “Today, the majority of our revenue comes from advertising.
    Advertisers are increasingly turning to the Internet to market their products and services. Google AdWords, our auction-based advertising program, enables advertisers to deliver relevant ads targeted to search queries or web content to potential customers across Google sites and through the Google Network, which consists of content owners and websites. Our proprietary technology automatically matches ads to the content of the page on which they appear, and advertisers pay us either when a user clicks on one of its ads or based on the number of times their ads appear on the Google Network.
    We distribute our advertisers' AdWords ads for display on the Google Network through our AdSense program. We share most of the revenue generated from ads shown on a site of a Google Network member with that member.”
    Translation: Google's IPO gave the company massive cash reserves initially and, as long as the stock price keeps going up, “make” the company money (they paid $1.65 billion for YouTube and earned that much plus more by the stock price going up 2% today!)
    But it's their AdSense program that generates the big money for them and makes them an actual legit moneymaking enterprise (unlike so many Internet companies, both Web 1.0 and Web 2.0 – including YouTube which apparently had a business plan of “get a lot of people looking at us then get bought out.”)
    I've never used it but how I understand AdSense to work is that anyone can bid on the keywords that people use for their Google searches in an auction-type environment. If you and I are the only two people bidding on the words “Saskatchewan blogs” and you're willing to pay more than I am, when people search for that phrase, they'll see an ad for “The Centre of the Universe” instead of “Head Tale”.
    They also serve ads to sites based on the content of the site. So if I visit a hockey site with news about the Calgary Flames, I'll see ads related to the Calgary Flames.
    To me, the reason they've been so successful with this program is because they made the links unobtrusive text, similar to their regular search results except highlighted in a different colour. This is a massive improvement over the gaudy banner ads that were the dominant online advertising mechanism previously (and still are on many sites.)
    I'm not positive but I think Yahoo created a similar advertising model for their own company when they saw how successful Google's was which now generates a lot of revenue for them. Yahoo also has more pay services and affiliate agreements than Google which also brings in revenue.

    Posted 10 Oct 2006 at 4:52 am
  3. Anonymous wrote:

    Heh. I *knew* the answer would involve “Why don't you just Google it?” I wanted to ask you because you're much better at explaining things than Google is. And I like the spin you put on things.
    I figured that's how the paid link advertising worked, and I completely agree – those of us who know why there's a purple/blue/whatever background on the top link after a search also know that it's most likely a paid link placement or advertisement…I'm still curious about how well web advertising works, too, and whether it's actually effective – I always thought you could get to be higher on a search list simply by having lots of new/currently changing content and clever tags. Is this 'old school' now?
    On the one hand, it's pretty cool how well Google has done. On the other hand, is it just me, or is Google really taking over the world?
    Maybe I'll go Google “Google takes over the world”…

    Posted 10 Oct 2006 at 2:27 pm
  4. Anonymous wrote:

    There. I added an image of the new Google interface for your “Google takes over the world” search.

    Posted 11 Oct 2006 at 8:55 pm

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