Google going ga-ga over video

Posted Oct 9th 2006 11:49AM by Tom Taulli
Filed under: Deals, Google (GOOG), Marketing and Advertising

youtube

Apparently, Google Inc.(NASDAQ:GOOG) and YouTube spent the weekend negotiating a mega deal (rumored at $1.6 billion). The scuttlebutt is that the deal may be announced after the market closes today. That's according to the NY Times.

There is certainly a lot of controversy regarding the deal. According to a post I did for BloggingStocks.com, I showed some reasons I think the deal makes sense. On the other hand, I also interviewed the CEO of vMix, who is not so upbeat.

But, it looks like Google wants YouTube. In fact, it appears that Google thinks that online video is the "next big" thing.

No doubt, a huge risk factor for a YouTube hook-up is the potential legal liability from copyright infringement.

But, YouTube today struck content licensing deals with CBS, Vivendi's Universal Music Group and Sony BMG Music Entertainment. These deals involve revenue sharing of advertising.

And why not?

It's a great way for traditional media companies to get a piece of the New Media frenzy. At the same time, it makes it easier for Google to buy YouTube.

What's more, YouTube also has developed software technology that will help deal with the copyright problems.

Actually, perhaps the real major risk with a YouTube deal is that it may alienate its users. As the founders cash-out, will they have much incentive to devote as much work to the property? Would you if you made hundreds of millions?

Tom Taulli is the author of various books, including the Complete M&A Handbook and operates InvestorOffering.com.

Tags: Google, Online Video, OnlineVideo, YouTube