by Head of Search
Andrew Girdwood
Hands up if you are surprised? Search giant Google buys YouTube for a whack of cash. $1.65bn. The US marks approve as shares in Google rise to $429.Andrew Girdwood
This is not usual. Google usually buys smaller start ups that have yet to prove themselves. Splashing out on YouTube goes against the trend.
"YouTube has huge traffic and is able to reach and appeal to a whole new set of potential viewers," Scott Kessler, an analyst at Standard & Poor's in New York, said before the announcement. "That's the key."
YouTube founders Steve Chen, Chad Hurley and their 65 employees will join the Google; the search engine said today in a statement distributed by Business Wire. In less than 24 months, San Bruno, California-based YouTube has catapulted from startup to Internet icon with 34 million monthly U.S. visitors. The purchase moves Google into the number two position for sites viewed in the US. That's a step up from the third position it held until recently. The two brands combined had 101 million visitors in August, according to Nielsen//NetRatings. Yahoo! Inc. sites had 106.7 million and Microsoft Corp.'s MSN Internet division had 98.5 million.
Google will use YouTube to display its AdSense targeted adverts. Nielsen notes that YouTube viewers spend, on average, 26 minutes on the site.
Before the deal YouTube struck deals with Universal Music Group, Sony Corp. and Warner Music Group to share revenue earned by sharing and streaming videos on its web site. Google's Google Video search ranked seventh in a ComScore Networks measurement of online video traffic sharing. With YouTube on its portfolio Google would take the lead position.
The news follows Yahoo!'s purchase of Jumpcut and Sony's purchase of Grouper Networks for $65 million in August.
What does this mean for search engine marketers? It means that the always dangerous content distribution network is even more dangerous.
How many YouTube users are on the site to buy something? How many YouTube users are on the site to watch something for free? YouTube's copyright battles are yet to be fought - the site is full of content which could come under copyright claims. With Google at the helm there is now a real and tangible target for a legal claim. Google will be able to pay damages far in excess of the damages that the start-up YouTube could afford.
The internet and SEO community is yet to see how YouTube and Google Video will come together. Sites that display out-takes and bloopers on YouTube and the real videos on Google Video are yet to see how the two delivery services till come together.
Google's purchase of YouTube further illustrates that the next generation of internet technologies will be with rich media and interactive technologies. Call this Web 2.0 if you will. The second generation of the Internet takes a step closer towards consolidation with the search engine's consolidation of the video market place. It is likely that the media - media 1.0 - will be writing about the purchase for days to come.
