When I first heard the rumours of the Google/YouTube deal I didn’t like it. Now that it has gone though, I’m having second thoughts: they might have got a bargain.
Google were prepared to pay $900 million for 3 years of search advertising on MySpace, which makes $1.6 billion to own a site that gets (very roughly) about half the traffic MySpace gets seem a pretty good deal to me.
Even ignoring the traditional page-based advertising, there’s huge potential for Google to embed advertisments in YouTube videos.
Obviously, the copyright problems are the big negative, but provided Google can work around that YouTube will be a money-making machine.
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We all love Google, but let’s not underestimate their ability to be massively wrong here. History is littered with companies that have underestimated the power of market forces, or overestimated their ability to ‘make things work’.
As for your YouTube/MySpace thing, there are other concerns, primary among them being that they have absolutely no liability towards MySpace, meaning MySpace could sued to hell tomorrow and they wouldn’t have to really worry. If YouTube gets sued, the record companies aren’t coming in for $1.6 billion, they’ll be trying to pull every nickel from Google’s warchest.
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