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The New Nickel-Tube: Google and YouTube

By Nick Hodge | October 10, 2006

So Google pur­chased You­Tube. US$1.65B in shares, paper-work money or an entry in an SEC filing.

In cold-hard num­bers: You­Tube has a repor­ted 100 mil­lion view­ers per day; based on the pur­chase price, each view equates to US$0.0452 over a year. Or, another way to look at it: as long as Google “earns” US5c for each pair of eye­balls for a few minutes, within a year it is fin­an­cially ahead.

Con­sid­er­ing the cur­rent cost of both text-advertising and TV advert­ising; and the oncom­ing onslaught from com­pet­it­ors such as Microsoft and Yahoo!, US5c per view seems rather attractive.

Oppor­tun­ity cost of not own­ing You­Tube: a com­pet­itor would have pur­chased it, first. Fox had already pur­chased the young Myspace eye­balls; and Microsoft is ser­i­ous about the online world and has all those XBoxen, Vis­tas, Zunes to cap­ture other eye­balls. You­Tube was obvi­ously on the block for sale, and each viewer is val­ued at US$0.0452. US$1.65B is not too much com­pared to a com­pet­itor get­ting the brand. You­Tube maybe the “text break­out” and single product weak­ness that dogged Google in recent months. (Robert Scoble has a per­spect­ive on this, too)

Look­ing into my crys­tal tube: Google’s Video Future: It is all about about the advert­ising. Poten­tial changes to Google Adsense:

Instead of crawl­ing the inter­net, Google is becom­ing the inter­net. This is rather a scar­ily thought that crossed my mind when read­ing this Wired art­icle (The Inform­a­tion Factor­ies) on their new data cen­ter in Wash­ing­ton state, US. Ulti­mately, it may have been cheaper to buy You­Tube than cre­ate a backing-store to hold indexed video and sound.

So next: watch Apple and Google. Not sale or pur­chase, just closer ties. Apple needs the con­tent, Google needs the hard­ware. Microsoft is the com­mon competitor.

Topics: advertising, future, google, technology, youtube | 4 Comments »

4 Responses to “The New Nickel-Tube: Google and YouTube”

  1. Andrew Smith Says:
    October 10th, 2006 at 9:00 pm

    You’ve hit it on the head when it comes to Google becom­ing the inter­net. Maybe this is how cor­por­a­tions would up tak­ing over the inter­net after all?

    All we need now is for some űber-cheap Google web host­ing to put a whole heap of data centres out of busi­ness. That will shift the bal­ance a bit further.

    Just count­ing: search, video, web host­ing, email, mer­chant trans­ac­tions, office pro­ductiv­ity applic­a­tions .… what could be left?

    Andrew

  2. hodgenick Says:
    October 10th, 2006 at 9:37 pm

    They could eas­ily go bey­ond the simple page/blog host­ing that they already do.

    GoogleSpace is upon us.

  3. hodgenick Says:
    October 11th, 2006 at 3:20 pm

    Google is God: http://www.thechurchofgoogle.org/Scripture/Proof_Google_Is_God.html

  4. Andrew Smith Says:
    October 13th, 2006 at 10:44 am

    News­flash: You­Tube has star­ted enga­ging in polit­ical cen­sor­ship shortly after ‘do no evil’ Google starts own­ing it.

    http://worldnetdaily.com/news/article.asp?ARTICLE_ID=52405

    Andrew

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