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Google owns user generated video on the internets via the youtube acquisition. I think they paid a very, very small price for this.

reubenyeah 16y ago
It's useless being the market leader if you can't make it profitable.
- dasil003 16y ago
  Google is profitable though. Does every property they have need to be profitable? Does every engineer need to directly add at least $250,000 to the bottom line? If user-generated video is in any way tangentially important to the future of online advertising, then YouTube is worth more than their direct profit to Google.
gamble 16y ago
If I started handing out dollar bills on a street corner, I'd have plenty of customers too. Why is YouTube so valuable? If there's a way to make real money on YouTube-style video, Google sure hasn't found it. This profitless 'strategic' expansion at all costs mentality is exactly the management failure that's leads to stock price stagnation in mature tech companies like Microsoft and Google.
- d2viant 16y ago
  Interesting analogy. However, what if you're handing out a dollar bill to everyone as they enter your store, but then they're coming in and buying your product? That's more how I view the Google situation. They make these profitless attempts at getting people on their sites, which then generates massive amounts of advertising profits for them.
- muhfuhkuh 16y ago
  This is now probably the gazillionth time I've used this old data point, but Amazon was in the hole for 6 years before they even turned out a profit, often losing hundreds of millions in a quarter alone. The "strategic expansion" can also be spun as "category killer" management. What large business in their right mind would try to compete with YouTube at this point? VCs would scoff at anyone wanting to do a video-sharing startup now. It's a loss leader in the way Bing is to Microsoft or Cyber Monday is to Amazon: It grabs eyeballs. Case in point, Susan Boyle's debut album was not heavily marketed in the US; and her performances were originally broadcast only in the UK but made famous through YouTube. The album went on to sell more than 6 million copies worldwide. That is reach and marketing (even when it's unintended). YouTube now strikes _actual_ marketing deals for its front page, and has actively stepped up inserted ads in a huge way this year. And, they've been very close to profitability this year. All in good time, I suppose.
  - gamble 16y ago
    Dozens of other companies followed Amazon's strategy and went bankrupt. Plus Amazon had an easy way to monetize traffic. Traffic alone isn't worth anything unless you can wring more money out of your visitors than it costs to service their requests. Google's existing advertising business works despite the low value of traffic because Google is collecting their cut from a huge swath of the Internet, and because the one kind of traffic they own - search - is the most directly linked to actually buying things, and thus the most valuable. Youtube is almost the opposite - expensive to service and totally unrelated to monetizable actions.

reubenyeah 16y ago

It's useless being the market leader if you can't make it profitable.

dasil003 16y ago
Google is profitable though. Does every property they have need to be profitable? Does every engineer need to directly add at least $250,000 to the bottom line? If user-generated video is in any way tangentially important to the future of online advertising, then YouTube is worth more than their direct profit to Google.

gamble 16y ago

If I started handing out dollar bills on a street corner, I'd have plenty of customers too. Why is YouTube so valuable? If there's a way to make real money on YouTube-style video, Google sure hasn't found it. This profitless 'strategic' expansion at all costs mentality is exactly the management failure that's leads to stock price stagnation in mature tech companies like Microsoft and Google.

d2viant 16y ago
Interesting analogy. However, what if you're handing out a dollar bill to everyone as they enter your store, but then they're coming in and buying your product? That's more how I view the Google situation. They make these profitless attempts at getting people on their sites, which then generates massive amounts of advertising profits for them.
muhfuhkuh 16y ago
This is now probably the gazillionth time I've used this old data point, but Amazon was in the hole for 6 years before they even turned out a profit, often losing hundreds of millions in a quarter alone. The "strategic expansion" can also be spun as "category killer" management. What large business in their right mind would try to compete with YouTube at this point? VCs would scoff at anyone wanting to do a video-sharing startup now. It's a loss leader in the way Bing is to Microsoft or Cyber Monday is to Amazon: It grabs eyeballs. Case in point, Susan Boyle's debut album was not heavily marketed in the US; and her performances were originally broadcast only in the UK but made famous through YouTube. The album went on to sell more than 6 million copies worldwide. That is reach and marketing (even when it's unintended). YouTube now strikes _actual_ marketing deals for its front page, and has actively stepped up inserted ads in a huge way this year. And, they've been very close to profitability this year. All in good time, I suppose.
- gamble 16y ago
  Dozens of other companies followed Amazon's strategy and went bankrupt. Plus Amazon had an easy way to monetize traffic. Traffic alone isn't worth anything unless you can wring more money out of your visitors than it costs to service their requests. Google's existing advertising business works despite the low value of traffic because Google is collecting their cut from a huge swath of the Internet, and because the one kind of traffic they own - search - is the most directly linked to actually buying things, and thus the most valuable. Youtube is almost the opposite - expensive to service and totally unrelated to monetizable actions.