“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.”
So says Uncle Fester, and he's right.
I suppose everyone's got a take on Google's purchase of YouTube, so here's mine: $1.6 billion is an insane amount of money for Google to spend on YouTube, the stand-alone business model, but it's a pretty cheap way to buy yourself into the future of entertainment.
Google's core business is putting an audience in touch with the information they want, and slathering the whole experience with ads that are somehow tuned to the individual reader's interests. They're quickly dominating that business with regards to text, but the web sure isn't limited to alphanumeric characters. Since YouTube is beginning to dominate the way people search for, discover, watch, and share video on the internet, it makes sense for Google to bring that network into the fold. As I've said before, the new network looks more like Google than it does ABC, CBS, or NBC.
And while the existing dominant players in video entertainment (the broadcast and cable networks, and their production partners) slowly adopt digital distribution strategies, I suspect smaller independent producers will start to see the large reach, digital word-of-mouth, searchability, and potential for revenue presented by a Google/YouTube-mediated network as an increasingly interesting option.
Link.