So, its done. $1.6 Billion dollars later and Google has launched its takeover of online video sharing site YouTube – is this a huge stroke of genius or a high risk move that could end up in a rather monster flop? What does it mean to the market, and to you as an entrepreneur when Google buys YouTube?
First, what is Google looking for in the YouTube acquisition? First and foremost, they understand the incredible growth in eyeballs YouTube has been able to capture in less than 18-months.
For a company like Google who have spend considerable time on business models allowing them to monetize eyeballs, this is a very attractive way to instantly become involved in one of the biggest application trends on the internet since email and search – online video.
When you look closer, you can see that this really was a savvy move on Google’s part. YouTube had the incredible infrastructure to virally attract traffic – with arguably much more potential than Myspace or the hundreds of other social networking sites because it was primarily based on VIDEO.
Sure, Myspace is also a big and growing player in video streaming, but in the mind of the public, Myspace is primarily a profile sharing site, not a video sharing site. Branding in this case means allot.
In addition, although $1.6 Billion seems like a massive amount of money – and it is for most companies – its still less than 1% of Google’s overall capitalization which serves to demonstrate how incredibly large Google has become.
Finally, the one remaining concern the market has over YouTube is its vulnerability to copyright infringement suits given that controlling every single piece of content uploaded is an extremely daunting task. However, what better company than Google to accomplish such a feat – with an army of lawyers, previous experience in copyright issues and some of the best search technology in the world – they should easily be able to build technology for evaluating content into place.
Now, what does Google’s purchase of YouTube mean for you?
Here are two major conclusions we can draw —
1. This sale validates the use of social networking sites in generating traffic that can be monetized – if done properly. Social networking sites lack a business model that has kept them all lacking in revenue and profit – the gloves are off and we will now see a growing trend of unique ways for monetizing social networking traffic. Innovative new techniques will emerge or else this traffic will go elsewhere. We’ve been discussing how you can use social networking to generate traffic and revenue as well as brand to your business over at the InfoMarktersZone in the last few months.
2. This sale of YouTube to Google also validates the use of video online – video for advertising, video for communication and teaching and video for soft-selling content leading to back-end income. Online video is no longer a fad -its a full-borne trend that shows immense upside.
Rather than sitting back wondering if the Google purchase of YouTube will end up to be wildly successful, we would better put our time into digging deeper into social networking, understand our own business models better and setting up our own automated traffic generation machine using social networking principles in our market – oh, and learning a thing or two about video production would be a good idea too.
Jeff
