October 11th, 2006

Google Buys YouTube

Back at Techcrunch, Michael Arrington confirms that Google has acquired YouTube.

My thoughts:

There was word that although YouTube has dominated the online video sharing market, its founders Chad Hurley and Steven Chen aren’t making serious money out of it and are actually living on credit. YouTube’s only future is to be bought out by something bigger, in this case Google, who beat out Yahoo! at the very last moments of the deal.

Google’s been aggressive in pursuing video as part of their advertising business that makes up most of their revenue. But what’s odd is that with their recent $1 billion agreement with MySpace who has their own video sharing space, it’s interesting to see if Google will be allowed to display video ads alongside MySpace’s. Looks like a conflict of interest in the horizon. The numbers tell it all. About 70% of Youtube’s traffic comes from MySpace. If Google decides to insert advertising in all of YouTube’s videos shown on MySpace, they get instant free advertising, right? MySpace appeared to be surprised by the whole buyout event, so it’s safe to say they’re already pondering the same thing.

So far, YouTube captures about 34 million users a month, while MySpace’s own tube gets 17 million but they’re catching up very fast. If and when MySpace decides to get rid of all YouTube videos from their site, that will spell trouble for Google. And honestly, online video buffs will be put off when they begin to see advertising in YouTube videos. Hey, that’s the one major reason they watch stuff on the Internet. No ads!

On the bright side, Chad and Steve are now about $200-$300 million richer. I can practically see them swimming in a sea of liquefied gold in this video they made post-Google:

Good for you, dudes!

Posted in Google, Myspace, Opinion, Yahoo!

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