Google Buys YouTube. Now What? - Both Sides Benefit
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When YouTube was launched less than two years ago, it’s doubtful that its founders dreamed it would become this big and popular this fast. It makes 100 million videos available every day, and 65,000 new videos are added daily. It boasts 20 million unique visitors every month. It ranks fourth among Web 2.0 sites, right behind MySpace, Facebook, and Wikipedia. YouTube accounts for more than 46 percent of the video on the Internet.
These points hint at what made Google willing to spend several times what it spent on its last 15 purchases of companies combined. YouTube has a tremendous library of videos, which can only benefit from Google’s search technology. YouTube also has a ton of eyeballs viewing those videos. The company has far more traction in this area of user-created content than Google does with its own Google Video, though “Google Video doesn’t go away ever – I want to make that clear,” insists Eric Schmidt, Google CEO.
Indeed, it’s worth noting that “You’ve got more video being viewed on YouTube than you do on some cable channels,” according to Ian Schafer, CEO of marketing firm Deep Focus. That all but suggests the classic TV model: show content, and make money by selling advertisements around the content. Google may be all about search, but it is advertising revenue that pays its bills. With that kind of audience, Google’s purchase of YouTube means that the search engine becomes the dominant player in the online video space, increasing its reach; it also enables the company to give its advertisers another avenue. This fits in nicely with the fact that Google recently began offering video ads. Broadband connections have become common enough to support a wide audience for online video. And with online video’s increasing popularity, one could hardly picture a better time for Google to purchase YouTube.
And what does YouTube get out of it? Nothing short of the resources and expertise of one of the brainiest, savviest, richest technology companies around. The first step, of course, is marrying the power of Google’s search engine algorithms to YouTube’s video library. That is sure to please YouTube’s audience. YouTube also gains instant credibility after being purchased by Google, which will help it in any future deals it makes. Even now, Google and YouTube are working together to improve the copyright protection on YouTube’s site…which brings us to the potential downside of the deal.
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