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06/10/2006

Google may acquire YouTube - talks underway

* UPDATED *

Rumours of Google buying YouTube first reported by TechCrunch have been apparently confirmed by a story in the Washington Post just now:

Google Inc. is in talks to acquire popular video-sharing site YouTube Inc. for roughly $1.6 billion, according to a person familiar with the matter. The discussions are still at a sensitive stage and could well break off, this person says.

A spokeswoman for YouTube could not be reached for comment. A Google spokesman said, "We don't comment on rumors and speculation." Rumors of such talks were reported earlier on the TechCrunch blog.

It would be a great deal both sides. YouTube belongs with a company that understands networks, not a media company still thinking in terms of channels and audience share. It also needs strong partners and deals to head off threats from the likes of MySpace Video, which has made a real impact by mimicking the simplicity and the usefulness of YouTube's features (see Viral Video Charts top 25 videos and there are often as many MySpace as YouTube videos scoring lots of "buzz").

Google on the other hand needs to stake a better claim to video on the web than its current offering, Google Video. And the massive user base of YouTube would be a great growth opportunity for its sponsored ads service, AdSense.

* * Update * *

Jason Calacanis has some more reasons that the deal would be a great idea...

 

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Comments

I'm sure there's plenty of analysts who've given Google a kicking and Eric Schmidt a roasting for passing on the MySpace acquisition. But a MySpace Google tie up would have been a very strange thing - there never seemed much affinity between the brands. Google & YouTube? As an aficionado of both brands, that makes sense to me.

You've got to stop and ponder, though, just how much Google's caution and lack of focus will have cost them if they cough up $1.6 billion for YouTube. (And how much much more it might cost them if they don't).

Google had a very decent Flash based video solution back in the summer of 2005, well before YouTube got any traction. I used to use the two sites quite interchangeably.

But Google made two big mistakes. First, it failed to innovate on features. Even if it had just kept pace with YouTube, feature for feature, it would have been in a much better position. Second, and much more unforgivably, it made no effort to leverage it's almost inconceivably huge marketing advantage before it was too late. Google Video appeared as a link on Google's homepage, what, three months ago? And in the UK it still hasn't.

So you're telling me, Google, that the lightly used and unmonetized Google image search or voting for my favourite Google logo submitted by schoolchildren (all linked from Google's UK homepage) are more strategically important to you than video? Er, I don't think so.

Look, I love Google, but I'm glad I'm not a shareholder right now. Not least, because if I thought the triumvirate were doing a bad job, there's not a damn thing I could do about it. The voting structure would make me, as it makes the views of every outside shareholder, quite irrelevant.

You're right that the Viral Video Chart gives quite an interesting take on the battle between YouTube and MySpace. We'd really like to re-use our historic data to chart mindshare amongst the big video sites at some point.

I point out, though, that we track blog buzz and MySpace's 'blog this' button makes it very, very easy for MySpacers to embed a video on their MySpace blog. If YouTube had similar functionality, I reckon our chart would look quite different.

Thanks for the insights, Scott - very interesting indeed.

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