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You weren't alone in thinking Google overpaid for YouTube
And you know what? Google CEO Eric Schmidt agrees. Kind of. CNET reports that in a deposition earlier this year, Schmidt stated that he asked Google's board of directors to approve the $1.65 billion figure, even though the board only believed YouTube was worth between $600 and $700 million at the time.
Basically, if Google didn't spend the extra money, Schmidt was under the impression that another company would purchase the web's most popular video site instead. And while YouTube wasn't making any real money in 2006, Google has continued to build the site's traffic while rolling out several different revenue models.
What do you think. In retrospect, do you still think Google paid too much for YouTube?
Comments
16
Subscribe to commentsuttererOct 6th 2009 4:17PM
YES THEY DID
ZeRoOct 6th 2009 4:20PM
I don't even know how I would even go about assessing its value! So I can't really say!
AdamOct 6th 2009 4:57PM
No. In the long run I think they'll make the money back, either directly through revenue generated on the site, or indirectly through all the new search data they're able to get from it (after all, more search queries are performed on YouTube in a given day than on Yahoo!)
DeadlYRageOct 6th 2009 7:26PM
If they did, it is pocket change to them. Everyone is still going to youtube, they will cash in some how.
jOct 6th 2009 8:14PM
no, they didnt. They had to over pay for youtube to avoid the many hundreds of lawsuits viacom et al was planning to hit youtube AFTER they were purchased. Those media companies were given stock options that they were able to cash in after the buyout. I believe their was some kind of agreement made so that youtube was not sued and everyone made money....off of google's back. i wish i had the conspiracy story saved that pointed to all of this.
AnthonyOct 7th 2009 7:23AM
It was actually a good deal, the most popular website on the internet (or at least the top 3), and the internet is a very big place, so that is a very big accomplishment. So really it was a very good deal, how much would you spend for youtube?
JiOct 7th 2009 7:24AM
I think Google did what they had to do.
AriOct 7th 2009 8:01AM
I'm not exactly an expert in analyzing a website's worth, but YouTube is the biggest name in videos on the web. Period. Any money spent on any other video hosting site would've been money wasted, but for YouTube, I'm not so sure...
ReeceOct 7th 2009 8:54AM
From what I can tell they looked at the situation, decided that there was a risk of another company buying youtube and they took action on that risk. They had the means, so I won't fault them for it.
BDLOct 7th 2009 10:29AM
They paid for the brand name, and for owning a video-sharing site that doesn't have to compete with YouTube's popularity. They'll make it up.
It also depends on who they thought the other buyer was. If they swiped YouTube from Microsoft, they did the smart thing.
MysteriusOct 8th 2009 1:46AM
It was and is a huge sum, but YouTube was and is a huge site.
I remember when the acquisition took place that some thought YouTube would fade or be outcompeted, or that lawsuits would cripple it.
Well, I don't have the stats, but YouTube is if anything more popular and dominant than it was back then, and Google has proven adept at handling lawsuits. (Those Google lawyers sure earn their keep, though.)
Overall, I think it's a keeper for Google.
Nothing like eBay and Skype, at any rate.
ChrisOct 10th 2009 12:53PM
the real question is: Why is google still running google video?
joeOct 18th 2009 9:23AM
they are not. G-Video is now just a video search engine, which finds old videos uploaded there, and youtube videos.
The Sexiest ManOct 13th 2009 6:31PM
I would need to see some numbers on ad revenues and page impressions to determine how good a deal its become.
they sure as hell have loved the new search data that youtube has brought them.
perfecting the algorithm... isn't that still the ultimate goal?
Edward KmettNov 1st 2009 1:36AM
No. I don't think they ultimately paid too much for YouTube. Recall that when they purchased YouTube they were more interested in controlling the legal battleground than they were in YouTube itself. Viacom and others already had their sights set on putting video behind a walled garden, which would have left Google out in the cold when it comes to indexing video. As a strategic play, they've been able to dig into deep coffers to pay for what lawsuits they lose and they've been able to avoid losing too many. On it is hard to imagine that YouTube's legal and financial team would have been able to weather the storm. Overall, they've managed to do what they set out to, and avoid getting marginalized in the video search space. They own the market. At the end of the day, that is worth a lot, even if they don't know how to monetize it today.
ewaldNov 20th 2009 6:16AM
What was Google's market cap at that time? 100 billion or so?
So investing 1,5%-2% of it's own (perceived) value in a potential rising star does not seem outragious to me. I have made bigger bets in my live (relatively speaking of course...).
ew