Thursday, October 12, 2006

Youtube owners talk about Google sale

You probably heard the news that Google is buying Youtube for a whopping amount of $1.65 billion. The Google/YouTube deal, will turn YouTube founders, Chad Hurley and Steven Chen, into instant multi-millionaires.

The two made a video posted in -- wherelse? -- Youtube about the acquisition.

Gal Beckerman discusses the deal in CJR Daily:

YouTube Deal is Doomed Just Because It Is
Gal Beckerman

The business world is filled with unprecedented moments. Deals happen that don't resemble anything previous, a stock surprises, a new CEO has personal qualities that don't fit the mold. This is obvious, right? It should be, but there are a surprising number of journalists who seem to expect every business event to fit neatly into established patterns and tired assumptions.

Take today's news that Google is buying YouTube for $1.6 billion. Let's see: we've got a couple of geeky Silicon Valley kids who want to get filthier rich and a large amount of money being dished out for a product that has never been monetized. What does this sound like? "It sounds like a tale from the late 1990's dot-com bubble."

So says the New York Times today in an article titled, "Dot-Com Boom Echoed in Deal to Buy You-Tube." Apparently, these echoes are "eerie." The price tag, the Times tells us, is too high because it can be compared "to the mind-boggling valuations that were once given to dozens of Silicon Valley companies a decade ago. Like YouTube, those companies were once the Next Big Thing, but some soon folded."

The story milks this parallel--down to describing how the deal went down at a booth at Denny's. So dot-com investors are generally over-exuberant. They (ie. the class of people broadly known as dot-com investors) cannot generally be trusted. Big is bad--generally. But amidst all this generalization, there are precious few of the details that would allow readers to judge the deal on their own.

Past deals went bad, we're told, but who asked? The question is, can this particular deal, orchestrated by this group of individuals, with their specific attributes and resources, succeed in today's marketplace? We don't know. But buried in the piece, someone who should know -- Dmitry Shapiro, chief executive of Veoh, a YouTube competitor that is backed by Time Warner and Michael D. Eisner--says only that the "deal has to feel a little like the 1990's, but it isn't."

We might add that many failed investments in the 1990s were in wildly speculative companies with no track record and inflated guesstimates as to how many eyeballs they might capture. YouTube, by contrast, is already showing 100 million videos per day. How much advertising revenue might that translate into? A basic question, but the Times leaves us guessing.

Either way, the Times seems shocked that "the price tag Google paid may simply have been the cost of beating its rivals -- Yahoo, Viacom and the News Corporation." That seems to us like just another way of saying that it was the cost of doing business.

But then, what do we know? All we did was read this article.

1 comment:

little light said...

nabili na ata talaga.

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