Google Acquires Youtube – 10 Unanswered Questions

Congrats to Michael Arrington on breaking the rumor and upstaging all of the rest of the media and business press in this matter that became a reality very quickly. Frederick Marckini of iProspect stated that Youtube would be acquired for more than Myspace was, I bet he didn’t think it would be almost three times as much as his guess stated in July! I joked with him that he held a position in Youtube during the session, he probably wishes that he did now…

10 Unanswered Questions:

1. Will users stay with the recently scrubbed and censored Youtube or will they migrate to other alternatives?

2. Why are the investment analysts and “major media” only allowed on the announcement conference call? Why not bloggers, why not the person, Michael Arrington, who broke the rumor and story in the first place?

3. Why can’t the Investor Relations, Press and Blogs at Google ever be in sync? The Official Google Blog still has no information about it. Instead there are posts on “Inside Macs at Google”…very strange.

4. This is what a multi-million dollar rat looks like, will the next of kin receive their fair share?

5. The Google Press Release states “This afternoon, we announced that we are acquiring YouTube for $1.65 billion in stock. YouTube will operate independently following the close of the transaction, which is expected in the fourth quarter of this year.” Why is this the first company that Google has ever kept independent?

6. There are a few theories on number five. I’m no lawyer, but if it’s kept as a separate legal entity, it might be able to limit any content liabilities to that entity?

7. How much is 44 seconds of everyone’s time (maybe a bit more now) worth?

8. Eric was forceful in the call about stating that these will remain separate entities and curiously he asserted Google Video will become even more important. Am I the only one that is mildly confused by this statement? Or is there some larger segmentation or story here?

9. Many people have asked “Why didn’t Microsoft buy Youtube?” With a large stake held by the people who funded Google, it was clear that Google had the right to make the last bid. Microsoft also likely would have had to pay cash due to it’s lack of a high growth currency to purchase Youtube and it’s not certain they could monetize it as well.

10. How long ago did these talks start? I’d say around this time.

What do you think the answers to these questions are?

UPDATE: Due to the popularity of this post, it’s getting alot of spam thrown at it. Comments are closed as of 6/4/2007.

34 Responses to Google Acquires Youtube – 10 Unanswered Questions

  1. Steven October 10, 2006 at 6:16 am #

    I forsee google video focusing on non- user contributed content, and more on corporate media dissemination (music clips, movie trailers, other paid content etc), while YouTube will exist more the way it is now. There will no doubt be suggested clips and links to paid content on Google video.

    Also, the google video player is more suited to movies and television shows and allows >10 min clips. This may change, but why mess with a working formula?

  2. Atari October 10, 2006 at 6:20 am #

    I would have to agree with number five, in order to limit their liability Google has decided to keep YouTube a seperate entity. It is also possible that later down the road YouTube and Google Video will be synced.

    The YouTube acquisition for Google is a smart step for the future. Google has been buying up tons of dark fiber (un-used fiber optics) and their recent building acquisition in New York puts them right on top of the heart of the internet. Not to mention their power house computing centers.

    What I’m getting at is that Google is one of the few companies that could possibly monetize and manage YouTube because in the future they will not have to worry about distribution or bandwidth once they put to use all that Dark Fiber.

  3. PinkBunny October 10, 2006 at 6:48 am #

    This is all really easy. Google will only buy an entity to generate some income from advertising, or from service needs. Each youtube video will now follow a very basic set of sequence. A fifteen second advert, and then the video will play. The google video service will deliver payperview types of servies, in which, you can watch televised programs, movies, etc.

    The question for the public is whether google/youtube still allows such heavy user-submitted content. This forms liability issues. However, this is basically circumvented by placing some very basic review forms for google/youtube. The fact that they remove content upon request allows YouTube to keep accepting user content. As long as the content owners of copyrighted material who do not wish for videos to be available via youtube do not put up a legal hurdle, YouTube will operate as a general ad-ran free content viewing site ran off of user submissions, and googleVideo will run as paid for service and still ad-free.

  4. Sebastian Moser October 10, 2006 at 7:36 am #

    1. No, they won’t. And that’s the reason for question 5. As long as YouTube stays independent, it won’t become Googlyfied.

    2. These are calls for the big stock holders of Google, not for the media.

    3. Investor Relations and Press Release were in sync. The reason for not yet talking about that public very much is to hinder question 1) from happening.

    5. Because this is the first company of that kind (it’s already big and there’s a big competitor already available in house).

    6. No, because Google Video will be affected by content liabilities, too. And remember Microsoft: Any lawsuits didn’t affect their business, they made enough profits anyway. Also, they were able to close deals with several media corporations already, which is something that will continue, I guess.

    8. Both products have a strong brand, neither of them will be killed by Google.

    9. Microsoft was too late, and they not yet understand that a good product is more than good technology. YouTube technology can be copied and re-created within several weeks, no problem. But you have to have the community that uses your product. And that’s what YouTube has. Google slowly starts to understand that, too.

  5. Jakob October 10, 2006 at 7:44 am #

    Question 11: Will Google block YouTube videos Google Video style for certain countries (like China) or keep them avaiable for everyone?

  6. Dan October 10, 2006 at 7:54 am #

    Thanks David,
    You draw attention to Fredericks great early call. I’m now watching for what Google can do with this. News Corp can lay claim to Myspace being one of the greatest 12 month return on ivestments ever seen…..http://slashdot.org/articles/06/10/05/216228.shtml

    YouTube has won its place in the market very well and Google can leverage this like no other (including News), watchout!

  7. Ted October 10, 2006 at 8:09 am #

    Google has kept YouTube separate so it can still take it IPO and generate the real revenue the Venture Capitalists want to see from this deal. The $400 – $500 Million is small change compared to previous Google investments.

  8. Abe Olandres October 10, 2006 at 9:22 am #

    With $1.65B how long will it take for Google to recuperate that amount from YouTube? Dare we say web-tv-ads?

  9. guahaha! October 10, 2006 at 9:29 am #

    hu 🙂

  10. cap'n slappy October 10, 2006 at 9:50 am #

    I think all of you need to learn what the word “monetize” means and stop using it to sound business-savvy.

    Monetize means to make something into currency. YouTube is not being made into currency.

  11. Ivan Minic October 10, 2006 at 9:59 am #

    Google knows! 🙂

  12. RW October 10, 2006 at 12:12 pm #

    I’m trying to figure out why you folks buy into the statement “will remain independent”? Every acquisition I’ve ever heard of has made the same statement. This is there to keep the important people from both Google Video and YouTube from fleeing in the wake of the coming layoffs. Anyone want to bet that in 6 months “GooTube” will be the merged Google Vid and YouTube organizations (internally).

    Of course, they will continue to have separate web sites, but the organization within Google will be 1 (smaller than the 2 of them are now) organization.

    For the record, Google (like all public companies) is run by the shareholders. That means that no matter how hard the CEO tries to make promises about what he (or she) wants, the Board of Directors will dictate what has to happen. Even if the CEO owns most of the stock, he still has to answer to the BOD – and they answer to the shareholders. (Take a look at what happened to HP/Compaq when they merged.) In most cases, the CEO just goes with the flow – because he’s already rich beyond his wildest dreams, so pushing a rock uphill isn’t worth the effort. The BOD meets once or twice a quarter, so they only look at what the analysts say (usually reading about it on the flight to the meeting), and make decisions based on that.

    Google may make YouTube a financial success, but it won’t be because they remained “independent”.

  13. Kevin October 10, 2006 at 6:25 pm #

    This is not the first company Google ever kept independent. Check out dodgeball.com

  14. SirNuke October 10, 2006 at 9:44 pm #

    Blogger and Writely are still very independant.

    @Jakob

    Google does not block access for Chinese users to Google Video. It does not offer a Chinese version of Google Video (likely since Google would not be able to comply with the censorship requirements). The Chinese government, however, has been known to block access to both YouTube and Google Video, and will likely to continue to do so.

  15. David October 10, 2006 at 9:57 pm #

    Blogger is still the worst blogging platform in existence!

    Kevin – thanks for pointing out dodgeball.com

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