Youtube: I told you so :)

In a previous post (, I mentioned that my biggest concern with the Google / Youtube deal was not the valuation, but copyright issues. Now that Viacom has sued Google for $1 billion, those fears seem validated.

That said, traditional media companies probably don’t want to alienate their viewers too much by refusing to embrace the web so chances are that they will settle for a large dollar amount plus a licensing deal.

I wonder how much of the $1.65 billion was put in escrow to be used against copyright claims…

  • A few thoughts:

    1) I think the larger unknown has always been whether a better product could eventually unseat YouTube. Google is guessing not, some VCs are guessing yes (e.g., Accel and Benchmark by funding MetaCafe).

    2) The IP issues clearly weren’t unanticipated by Google, so the recent harbingers don’t show that this was a poor acquisition. Let’s wait to see the outcome of the suit, and the effect it has on Google’s stock.

    3) Right now the status quo is bright and rosy: The day after Google bought YouTube, its market share went up by more than 2 billion, an increase that is attributed to the acquisition, so it seems Google actually gained more money than it lost by acquiring YouTube.

    4) You may be interested to learn that YouTube is reported to have netted an underwhelming $15 million in revenues for the entire 2006!

  • Google has not successfully managed anything outside of paid search, which seems surprising until one realizes the company’s approach to development: 1,000s of engineers “doing their own thing” has never worked for any other hi-tech company. Fortunately, they do extraordinarily well with Adsense and that success leads many to hype the potential of everything else they dabble in. But let’s be honest: the chances that Google will manage to sustain Gootube any better than their failed efforts in far less sophisticated services such as social networking (Orkut) and email (Gmail) are very low if their own history serves a lesson. I believe startups will out innovate Google, circumvent costly copyright issues, and ultimately open up a massive hole in the armor of Adsense. We all know who is patiently waiting for that day.

  • A couple of questions for you Fa: 1- do you see orkut as the failure this previous commentor did? 2- Have you read Robert X Cringley’s take on Google,Video and Dark Fiber? ( to summarize: He mentionds Google is leasing up alot of dark fiber and posits that Google will seek to dominate content on demand and use its myriad farflung datacenter network as a caching mechanism and put the cable companies at their mercy )