Google spends $1,650,000,000 on YouTube (and eat my brains)

How much? It's IT Blogwatch, in which Google buys YouTube. Not to mention a Halloween supper party with creepy, but 100% tasty and edible courses...

Nancy Weil summarizes for us:

Google Inc. has laid the speculation to rest -- it is buying YouTube for $1.65 billion in a stock transaction ... YouTube operates a wildly popular Web site showing original videos that range from amateurish to professional. It will continue to operate independently after the Google acquisition ... The companies will merge Google's search expertise with YouTube's video expertise, pushing what executives believe is a hot emerging market of video being offered over the Internet.

But as Patrick Thibodeau reports, Steve Ballmer was dismissive:

Microsoft CEO Steve Ballmer today all but dismissed Google Inc.'s just-announced $1.65 billion purchase of video-sharing service YouTube as a waste of money ... "If you look at most of the content up at YouTube today, it is copyrighted material," said Ballmer. For all the chatter about how YouTube is all about home video, in the end people want to see things like replays of the recent 60 Minutes interview with former Hewlett-Packard Co. chairman Carly Fiorina, said Ballmer.

Robin Harris calls it an, "Abject failure":

In its 21-month life, YouTube has created value at the rate of $80 million dollars a month ... it is Google's first public admission of abject failure, failure that is costing them $1.65 billion and which will rend the carefully fostered geek culture of the company. Google is an advertising company and the world leader in monetizing internet eyeballs. They are also the worst marketing company in high tech ... Sure, the guys on the Google video team will wondering why they aren't richer. But the bigger hit comes from knowing that YouTube isn't about the technology, it is about the market. And there Google didn't have a clue.

Ars's Anders Bylund:

The news comes after a cornucopia of press releases announcing Google and YouTube deals to distribute music videos from Universal, Sony, Warner Music, and CBS, paving the way for a relatively risk-free buyout from Google's perspective.
...
Google Video is not going away. It's unclear how the two services will be different from each other, but Eric Schmidt did mention that one of the principal strengths of YouTube was the social networking aspect of it
...
YouTube has a corporate backer now, and the rash of media distribution deals appears to have smoothed the copyright issues over—for now. Will Google get its money's worth anytime soon? Maybe not, but again Schmidt called it a vision-based deal. Get the right people on the bus, in other words, and then they'll figure out where to drive it.

Techdirt's Mike:

Google already had a competing product that was doing well, but appeared to be a distant second in the hype game. Bringing in YouTube and combining the two (which will be done eventually, no matter how much they talk up the separation) does wipe out the competitor. Secondly, it keeps YouTube out of a competitor's hands. This is probably a much bigger reason.

Scoble, R. asks, "What if Microsoft bought YouTube?":

What could have Microsoft done with YouTube? Used it as a wedge to get into Google’s search and charge per click advertising. Huh? Well, one buyer from one of these big companies could buy hundreds of millions of dollars of advertising ... once you build a relationship with an ad buyer, getting him or her to also put those same ads on Xbox, Live.com search, MS-sponsored blogs, and other places, is real easy.
...
Looks like Microsoft thought the price was too high. That’s been the strategy lately. Don’t buy best-of-breed — copy those — and buy stuff that’s more reasonably priced. Thing is, a copy of YouTube won’t have the audience (Microsoft still thinks it can build a big audience by cloning the technology. Hey Steve Ballmer, that strategy won’t work! You can’t clone the Beatles — this is NOT a technology-only play!)

Shel Israel wonders about the Dorian Gray factor:

$1 billion less than eBay paid for Skype makes it sound to me like a bargain. It seems to me that Google sees in YouTube exactly what it saw in itself. I think YouTube's value moving forward will be worth many times more.

Mark Cuban calls Google, "Crazy":

if Google gets nailed one single time for copyright violation, there are going to be more shareholder lawsuits than doans has pills ... Think maybe how Google discloses what they perceive the copyright risk to be in the SEC filings might be an interesting read?
...
It will be interesting to see just how google reconciles selling videos like Crazy in Love from Sony, when the same video is available as a user upload for free from youtube.
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Could Fox, the owner of Myspace put GooTube in a huge hole by being legally aggressive and going after every video of Stewy from Family Guy, American Idol, any of their TV shows? The same with their movies.

David Dalka answers his own questions:

Why is this the first company that Google has ever kept independent? ... I’m no lawyer, but if it’s kept as a seperate legal entity, it might be able to limit any content liabilities to that entity?

Joseph Laszlo agrees, kinda:

Mark Cuban ... and I seem to be the only ones NOT saying this deal is the best thing since sliced bread ... YouTube's user base is not necessarily a loyal one -- an audience member can easily view videos from anywhere, and a contributor can fairly easily post videos to other places too. How you take something like YouTube and invest it with the stickiness of, say, an instant messaging network or a MySpace, is a big challenge.

Buffer overflow:

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And finally... A Successful Halloween Supper Party

Richi Jennings is an independent technology and marketing consultant, specializing in email, blogging, Linux, and computer security. A 20 year, cross-functional IT veteran, he is also an analyst at Ferris Research. Contact Richi at blogwatch@richi.co.uk.