Five Reasons Google Will Acquire YouTube (and 5 Reasons Google Won't)
One day after YouTube's Chad Hurley attended the secret Google Think Tank meeting in Mountain View, rumors are swirling that the search giant is acquiring YouTube for $1.6 billion.
The rumor (also "reported" in the WSJ and now apparently on CNBC) is based on an e-mail Mike Arrington received last night, and there's no more information. I could actually fill the rest of this post with crayon drawings of puppy dogs in funny hats and it would be more substantial than any conjecture.
But since the attention economy is just about that -- attention -- and since I can't draw very well, here are five reasons why Google would buy YouTube, and five reasons this rumor is pure, unadulterated bunk.
Five Reasons Google Will Acquire YouTube
- YouTube has more traffic than Google Video and, what's more, represents the cultural zeitgeist in a way that Google does not. By acquiring YouTube, Google would be investing in the future of interactivity on the Web, and ensuring that the company has the inside track on video search trends.
- Google can afford the bandwidth. YouTube's biggest expense is the bandwidth required to serve 100M+ videos per day. Ostensibly, Google could cover those costs while actually making the site browsing faster through Google's distributed architecture.
- The advertising potential is enormous. Direct visits to YouTube are just one angle. If searches done through Google automatically lead to YouTube videos, that's another. What's more, YouTube, despite its immense cultural position, is still a small company with a small amount of revenue. The upside on the deal would be big for Google.
- Google has experience dealing with copyright holder concerns. It is one of the few companies that could buy YouTube and manage the copyright concerns that large studios and networks have.
- Google could integrate its social networking products and/or get the inside track on how a social network operates in a video-based site. Google is also heavily invested in mobile technologies -- I would expect to see YouTube functions integrated into handsets.
- Google already has a video-sharing application in Google Video. The company spent a lot of time and energy partnering with content owners, who apparently like that Google's videos include DRM.
- Google's advertising relationships -- including video syndication -- are based in Google Video.
- Google has a history of buying smaller companies. A notable exception is DMarc. YouTube could be the DMarc of online video, but is that even necessary?
- Litigation. Although YouTube apparently doesn't violate the DMCA -- the video company removes infinging content and doesn't induce users to upload such content -- the site could still find itself in legal trouble if the amount of copyrighted material gets out of hand. Google could be buying its way into a courtroom.
- Because it's just a rumor.
P.P.S Latest numbers from Hitwise say that during the last week of September, YouTube was first with 47.07% market share. Google is third with 11.09%, and Myspace is second with 22.11%