GoogleTube rumors

Now that I’ve gotten a little snarky at Mike and gotten that off of my chest, let’s take a look at his Unsubstantiated Rumor.

All Mike really said was that he had heard from a good source that Google was in talks with YouTube to purchase YouTube for about $1.6 billion.

My guess is that at this point the best we can assume is that it really is just a rumor. It is possible that there are talks going on and that Google is probably somewhere in there. Google Video, while somewhat used, does not receive the popular vote the way that YouTube does.

Given the addition of some Adsense ads, YouTube’s revenue could skyrocket and as long as Google leaves YouTube mostly alone it could become a cashcow for Google.

Is $1.6 billion too much? Probably. But it does fit into the market at the moment. Even with the addition of Adsense ads, I don’t see the purchase being a profitable one for many years. The other problem I see is how do you contexually advertise based on videos? There really isn’t much text associated with the video except for the title, a few tags, and any comments. What ads that would show would most likely be of the fairly generic set and as such the price per click would be fairly low. Of course, a couple million clicks at $.10 is still a good bit of money, but it wouldn’t pay off $1.6 billion anytime soon.

Is the rumor true? Possibly. I think we can count on the fact that there aquisition talks going on at YouTube, but I don’t think we’ll see anything come of it for a little while. It’s hard to tell, of course. We could see something fairly soon if they feel that the proverbial cat is out of the bag.

UPDATE: It’s official.  Google bought YouTube for $1.65 billion in stock.

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