Google gobbles up Youtube

OK folks,

Its official... Google is buying Youtube for 1.65 Billion in an all-stock deal.

"Internet search leader Google is snapping up YouTube for $1.65 billion, brushing aside copyright concerns to seize a starring role in the online video revolution.

The all-stock deal announced Monday unites one of the Internet’s marquee companies with one of its rapidly rising stars. It came just a few hours after YouTube unveiled three separate agreements with media companies to counter the threat of copyright-infringement lawsuits."

As expected, you can hear both yays and nays with respect to this deal...

Here are some naysayers...

Mark Cuban, owner of Dallas Mavericks, says "It will be interesting to see what happens next and what happens in the copyright world. I still think Google lawyers will be a busy, busy bunch. I don't think you can sue Google into oblivion, but as others have mentioned, if Google gets nailed one single time for copyright violation, there are going to be more shareholder lawsuits than Doans has pills to go with the pile-on copyright suits that follow. Think maybe how Google discloses what they perceive the copyright risk to be in the SEC filings might be an interesting read?"

New York Times thinks that there were eerie echoes of the late 1990’s boom time. "A profitless Web site started by three 20-somethings after a late-night dinner party is sold for more than a billion dollars, instantly turning dozens of its employees into paper millionaires. It sounds like a tale from the late 1990’s dot-com bubble, but it happened yesterday."

But the purchase price has also invited comparisons 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.

Google, with a market value of $132 billion, can clearly afford to take a gamble with YouTube, but the question remains: How to put a price tag on an unproven business?

“If you believe it’s the future of television, it’s clearly worth $1.6 billion,” Steven A. Ballmer, Microsoft’s chief executive, said of YouTube. “If you believe something else, you could write down maybe it’s not worth much at all.”

Washington Post warns, "Behind the buzz of the high-priced deal come a number of gambles, including a large amount of copyrighted material on the site that attracted both viewers who shared the videos and lawyers who cried foul on behalf of the copyright holders. Clips of popular shows such as "South Park," "The Daily Show with Jon Stewart" and "Laguna Beach" can be found on the site.

Also a factor is the fickleness of YouTube's online audience, which could migrate elsewhere or become turned off by the large amount of corporate advertising making its way onto the site. A year after online star MySpace.com, a social networking site, was acquired by News Corp. for $580 million, the core audience has shifted from teenagers to people in their thirties.

"The game back in the 1990s to 2001 was to attract as many eyeballs as possible. That hasn't changed," said Tim Bajarin, a longtime technology consultant and futurist with Creative Strategies. "The big difference today is the social network. One of the most powerful methods for spreading information is word of mouth, and the incredible explosion of that use, from spreading information and inviting people, especially within this young age group, is one huge difference."

Here are some yaysayers...

Newsweek says "Crazy - but it might make sense"..

CNN goes one step further and predicts that it one of the many such investments Google is going to make. It says, "During a conference call, Google chief executive officer Eric Schmidt said the YouTube deal would be one of "many investments" that Google planned to make in online video. He added that the combination of Google and YouTube would make Google more desirable to advertisers.

"This is just the beginning of an Internet video revolution," he said.

There is some debate about whether or not YouTube or other user-generated video sites will be able to attract the interest of top advertisers. But Tancer said that big corporations may be forced to start spending on ads tied to such clips."

Goolge Gives It Gas... says theStreet.com.

Disclaimer: I hope this deal works out well.. I own google shares...