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What Could YouTube Be Worth? 139

Posted by Zonk
from the to-the-highest-bidder dept.
An anonymous reader writes "C|Net has a story about the possible cost of YouTube. Sony just paid $65 Million for small-time videosharing outfit 'Grouper'. That site has around 1% of the videosharing market. The article asks, at that price, what might YouTube's 43% be worth?" From the article: "Entertainment analysts have predicted in recent weeks that sites with large followings would command a high price. The Sony deal proved them right. But while the Grouper deal helped establish a benchmark, there is still plenty of confusion about the fair value of online video companies. This is because the typical metrics for measuring a company appear to have gone out the window--just like they did during the bubble years of the late 1990s."
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What Could YouTube Be Worth?

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  • by kabz (770151) on Thursday August 24, 2006 @09:37PM (#15975014) Homepage Journal
    Here's my brilliant Web 2.0 business plan:

    1. Copy YouTube idea
    2. Rename it PornTube
    3. ???
    4. Profit !!

  • $2,795,000,000 (Score:5, Insightful)

    by MarkByers (770551) on Thursday August 24, 2006 @09:37PM (#15975017) Homepage Journal
    Ohhh I love maths questions!

    Sony just paid $65 Million for small-time videosharing outfit 'Grouper'. That site has around 1% of the videosharing market. The article asks, at that price, what might YouTube's 43% be worth?

    I would think the answer is $65m * 43 = $2,795,000,000.

    • by Jesterboy (106813) on Thursday August 24, 2006 @09:49PM (#15975069)
      Too conservative; I'm thinking 5 hojillion.

      Dollars.

      Canadian dollars.
    • by Firehed (942385)
      Yeah, but is Grouper losing money at the same rate Youtube is? Last I heard, their bandwidth bills were in the millions of dollars per month, which isn't even close to covered by advertising and whatnot.
    • That turns out to be a decent estimate [cbsnews.com].

      Let me save you the click:
      it appears only a matter of time before YouTube gets acquired - some speculate for as much as $2 billion
      .
      • Actually, that's just going in circles, because the original source [techcrunch.com] for the $2 billion estimate is TechCrunch [techcrunch.com]. His estimate was based on the Comscore data which said that Grouper had 542,000 unique visitors in July while YouTube had 16 million. So he was doing basically the same math as the parent - YouTube had about 32 times more visitors, multiply 32 by $65million, you get just over $2 billion.
        • by spongman (182339)
          The Comscore numbers are incorrect. Those guys get their statistics by scraping them from the bottom of their crack pipes.
    • 2.8 billion is around 2.5% of Google's market cap. If you asked a Wall Street analyst if they attributed 2.5% of Google's market cap to Google Video, they'd might say yes, based on the hopes that Google will be able to monetize it someday.

      Another way to look at it: CBS Corporation has a market cap of 22 Billion. CBS owns all sorts of businesses, I haven't done the math to estimate what % of the market cap would be attributable to the CBS broadcast network and the fully-owned affiliates, but I wouldn't

  • I'm thinking $2.795 Billion.

    This is some sort of trick question, right?
  • by HMC CS Major (540987) on Thursday August 24, 2006 @09:38PM (#15975020) Homepage
    950M, 650M, 250M, 250K. It's pulling 20gbps of data and has millions of eyes watching ad-ready video players.

    It's only worth what it can make in a reasonable amount of time, and that time is growing short as video blogging [vobbo.com] competitors [castpost.com] build [fileratings.com] their [vimeo.com] userbases [ourmedia.com].

    Eventually their huge market share will begin being split by competiing sites that slightly beat their technology, and then the value starts to fall...
    • I agree, if they don't do a better job of capitalizing on their success, they are going to have difficulties in the future. They can't run on VC money forever. The dot com boom was in part of foolish VCs that listened to the lie about not needing the business plan, and the dot com bust was in part of VCs starting to wise up to the fact that they've been taken.

      I'm not even sure if any technology investment is worthwhile given the vicious cycle of ups and downs. It looks to me to be a "hot potato" scheme,
      • by rtb61 (674572)
        The dot com bust had much more to do with corrupt brokers convincing the descendants of rich/ugly and pretty/stupid marriages, that the investments of actual original VCs (the ones who knew the investments were junk but with the help of some "friendly" brokers they could be made to appear the opposite) was top notch and worth getting into, this combined with warming the books over just a bit.

        Now add to that the statistical analysis of the put market (high debt in a short period = forced sale of shares on

  • by CrazyJim1 (809850) on Thursday August 24, 2006 @09:41PM (#15975034) Journal
    Soon, Old Television shows and Movies will be offered on various sites as the rights are given out. Eventually you'll be able to watch any show or Movie that's ever existed. Then after this happens, a connection to your television or special television will be created that will let you watch anything that's every existed at your will.

    These amatuer home videos are just the beginning. Eventually all professionally done shows will be available. And maybe there will be an indy uprising of stuff that wouldn't get on TV, but will be seen on the net. Actually that's already happened, but I believe amatuer stuff will become more refined over time.
    • by oskard (715652)
      Any show or movie that still exists* There is footage from films such as Metropolis that will sadly never, ever be recovered.
    • Um, people have been posting TV shows on youtube and such (streaming video 'channels' is one thing that readily springs to mind). Of course, it's not completely legit. You don't have to wait for the revolution, it's already in progress.
    • by a_nonamiss (743253) on Thursday August 24, 2006 @10:42PM (#15975284)
      You know, when the Internet was invented, people said it would be the end of libraries. There was the idea that you could take every book, magazine, journal, newspaper, etc. ever printed and put it online. And what a grand idea that would be. Then the intellectual property barons came out and put a quick end to that dream. It's sad, really, when you think of what the Internet could have been. A place where all information could be free, and information could transcend the barriers of distance, culture, politics, even language. Instead, everyone came to the party with their hand out, concerned with how they can get the biggest slice of the pie. If this mentality had existed 800 years ago, we'd still be in the dark ages. It would be nice if I could live to see the beginning of the next renaissence.
      • Re: (Score:2, Funny)

        by Anonymous Coward
        Then the intellectual property barons came out and put a quick end to that dream. It's sad, really, when you think of what the Internet could have been.

        But someone has to pay for the tubes!
      • If this mentality had existed 800 years ago, we'd still be in the dark ages.

        Oddly enough - this mentality did exist 800 years ago. Why do you think patents and copyrights were invented in the first place?
      • If this mentality had existed 800 years ago, we'd still be in the dark ages.

        If the mentality of 800 years ago existed today, everyone would have pirated multiple copies of every media in reach.
      • Re: (Score:3, Insightful)

        by Anonymous Coward
        And what a grand idea that would be. Then the intellectual property barons came out and put a quick end to that dream. It's sad, really, when you think of what the Internet could have been.

        Wow, and in a perfect world everything would be perfect. While your statement has the "all warm and nice inside" initial feel to it, it really makes absolutely no sense at all. What is it that occupies our libraries, mostly copyrighted "for profit" material. A great percentage of the material itself would not have b
      • Re: (Score:3, Insightful)

        by cowscows (103644)
        The IP folks are certainly being unreasonable, but you're being unreasonable in the opposite direction. The internet has grown and evolved at a pace far beyond anything else of its scale in human history. The so called "information age" is moving at a speed that makes the industrial revolution look like it took eons.

        And the neat thing is, there's still plenty of potential in it, and progress continues at this rapid rate. Thinking about what the internet could have been is pretty useless, because there's sti
      • by IamTheRealMike (537420) <mike@plan99.net> on Friday August 25, 2006 @09:57AM (#15977757) Homepage
        the intellectual property barons

        I think you mean authors, artists, journalists, researchers, software developers etc ... I guess you could consider Joe Blow novelist a "baron" but it's a bit of a stretch.

        A place where all information could be free

        A common dream amongst people who don't produce information for a living.

        • I think you mean authors, artists, journalists, researchers, software developers etc ...

          No, I mean the vampiric corporate machine feeds on these people. When you hear that an artist or author gets 3%-10% of the sale price of an album or a book, I'm talking about the people that get the remaining money without having any talent themselves. Sure, it costs time and money to bring these things to market, but most of this is driven by greed.

          A common dream amongst people who don't produce information for a l

      • by bigpat (158134)
        It's sad, really, when you think of what the Internet could have been.

        What is it that you are looking to know? Or are you talking about just newly created entertainment content? Because last time I checked there were definatelt a few places to go to find and get all that there is to know that you can learn about by reading, looking at pictures or seeing video. There are gaps in the knowledge that is available, but you are a member of the human race too and thanks to the Internet and places like wikipedia
  • by Anonymous Coward on Thursday August 24, 2006 @09:42PM (#15975038)
    dotcom 2.0 crash, here we come! Wheeeee!!!!
    • by kahrytan (913147)

        Companies relying to heavily on advertising caused the first dotcom bubble to burst. It seems no one learned their lesson.

      Also, I don't even use YouTube or have it bookmarked.
  • what's the motivation here? to keep an eye on what media people have on their pc to share?
    • by spongman (182339)
      no, all Grouper p2p traffic is encrypted. we do not have the ability to view files that you have shared privately on the Grouper network, only the members of your groups can do that. of course, everyone can see videos that you have shared publicly on the grouper web site...
  • It's important to realize that Grouper was founded by Josh Feltzer of spinner.com fame.

    In other words, Sony didn't buy Grouper for $65 million, Josh Feltzer sold Grouper for $65 million.
  • by Anonymous Coward
    what might YouTube's 43% be worth?
    I don't know, but I thought it was higher before I saw this [youtube.com].
  • Red flag (Score:5, Insightful)

    by LotsOfPhil (982823) on Thursday August 24, 2006 @09:48PM (#15975065)
    This seems like a warning sign to me. If you don't know how much it's worth and don't see how it can make money, you probably shouldn't spend a billion dollars on it.
    there is still plenty of confusion about the fair value of online video companies. This is because the typical metrics for measuring a company appear to have gone out the window--just like they did during the bubble years of the late 1990s.
    Nobody knows whether anyone can make money by hosting user-submitted videos. (None of the top standalone companies in the sector has reported profits.)
    • "This is because the typical metrics for measuring a company appear to have gone out the window--just like they did during the bubble years of the late 1990s."

      Yes. In the late 1990s, the typical metrics for measuring a company did APPEAR to go out the window. In reality, those metrics were still as valid as ever.
    • by GWBasic (900357)

      It's not a red flag, yet. Now is the perfect time to invest! When everyone else buys in, (and your money doubles, triples, ect,) you sell.

      ... After all, that's what most of the VCs who got rich off of the internet bubble did. They invested in any "internet" startup they could find, took it public, and sold all their stock before the company crashed.

  • by crazyjeremy (857410) * on Thursday August 24, 2006 @09:49PM (#15975068) Homepage Journal
    If Youtube doesn't get some more VC soon to pay their estimated $1mil/month bandwidth costs, they may be worth nothing more than 600 or so servers. http://blog.forret.com/2006/05/youtube-bandwidth-t erabytes-per-day/ [forret.com] Keep in mind that article was written in May... Bubble 2.0 can change a lot in 3 months.
    • by imemyself (757318) on Thursday August 24, 2006 @10:01PM (#15975123)
      Even if YouTube were to go bankrupt tomorrow, someone would still pay *big* bucks for their domain name. Probably someone like Google, Yahoo, or MS.
      • We should always remember the tens of billions of dollars poured into the giants of Web 1.0 like Tripod.com, geocities.com, go.com, and Lycos.com. The venture capitalists always put their money where their brain is.

      • while the domain name itself would be quite valuable initially.. if the content that replaces the defunct website isnt appealing to the origional audience.. they would quickly find their videos somewhere else.. kinda like if slashdot was bought out and replaced with a video gaming only website.. some people would stay.. but most would go elsewhere.. as their interested in the "nerd" aspect of /.
    • I was wondering about that the last time I was on YouTube. "How the hell can they get, much less pay for, that much bandwidth?" Music is one thing, but video takes a whole lot of bandwidth. I have to wonder the same thing about anyone who even thinks about doing HDTV over the internet. Only the ISP could realistically provide that... which in many cases means the cable companies... which really doesn't change the service a whole lot.

      Anyway, about YouTube... how do they make their money anyway? Do they have
      • by kimvette (919543)
        Isn't digital cable already using IP for the MPEG2 stream?
        • by misleb (129952)
          Isn't digital cable already using IP for the MPEG2 stream?


          Nope, just raw broadcast MPEG2 frames. IP is encapsulated in those frames in the case of cable internet. It is actually reversed. MPEG2 is uses for IP instead of IP being used for MPEG2. If that many any sense.

          -matthew
  • by Soong (7225) on Thursday August 24, 2006 @09:49PM (#15975072) Homepage Journal
    1. Create internet fad.
    2. Get bought out. (Profit!)
    3. there is no step 3

    Step 2 might be expanded "get bought out by people with more money than understanding of internet fads". But really, after step 2 who cares about step 3? That's for the new owner to worry about.
    • Re: (Score:3, Funny)

      by joe_bruin (266648)
      Duuuuuude, shut up. You're ruining it for the rest of us. Give me a few more years to ride around on my Razor scooter between the Aeron chairs, developing cool software with no regard to ever making any money, getting company-sponsored lunch and free soda, and collecting worthless stock certificates for IPOs that will never happen. Those of you that missed the bubble the first time around: it's a good time to be an engineer, enjoy it. Find a job where culture is everything. Get a raise every six months
      • by saridder (103936)
        Don't forget the rooftop parties in SF on weekends. Who was that, Red Herring if I remember correctly?
  • Uh waaahhh? (Score:5, Funny)

    by Mayhem178 (920970) on Thursday August 24, 2006 @09:50PM (#15975080)
    Entertainment analysts have predicted in recent weeks that sites with large followings would command a high price.

    In other news, Entertainment analysts also predicted unanimously that tomorrow the sun will rise. Other predictions include that next week will have exactly 1 Monday and that Elvis and Jimmy Hoffa will not be candidates for the 2008 Presidential election.

    More at 11.
    • by ClamIAm (926466)
      I don't understand why we have "entertaiment analysts" commenting on the business of web sites. Sure, one could claim that Youtube is an "entertainment" site. So, um, since cruise ships have entertainment, I guess the entertainment analysts will be giving us their opinions on the cruise ship industry any day now.
  • but it's a major difference between grouper and YouTube. The folks who created grouper built DRM into their schemes, creating a ready-to-use widget for some big media company to scoop up and plug into their (flawed) strategy. YouTube, not so much. Lotsa eyeballs, but so far just another iteration of
    1. Build a ____ sharing site.
    2. ???
    3. Profit!
  • Legality (Score:4, Interesting)

    by coop247 (974899) on Thursday August 24, 2006 @10:00PM (#15975119)
    Copyright owners are finally starting to sue YouTube [techdirt.com]. Interestingly enough they are using the Grokster ruling, that "companies could be liable if they were found to induce the infringement in some manner."

    Their terms of use [youtube.com] say that users are responsible for any content posted. However, if I had a copyright on something posted I'd rather sue the company worth possibly billions than go through the hassle of hunting down a user.

    I haven't really heard about too much of this, so they are probably doing a pretty good job of taking down offending clips, but when lawyers smell money in the water, look out.
    • It's a bullshit suit though, since you don't have to sue Youtube to get a video pulled, you just have to click the links to inform about the infringement.
      • by KenSeymour (81018)
        So lets say you own the copyright to thousands of music videos. Are you supposed
        to hire someone to keep checking the site for your videos being uploaded?
        This is for 0 additional income generated from protecting your copyright.

        Or do you just go ahead and sue the company and see how the court rules.
        The court will probably rule in the favor of the copyright holders now
        that there is the Grokster decision.

        Another approach for them would be to track down and sue the uploaders.

        Perhaps youtube has a plan to work o
    • by Aqua OS X (458522)
      It would seem at if a VERY large portion of YouTube's content is content they don't own a the rights to. This is not going to last forever.

      Wait 2 years and we'll talk about youtube like we talk about Napster today. ie "remember when youtube was cool and you could find anything on it?"
  • Just put some ads on there and see what they sell for.

    Anyways this ISN'T like search engine technology.

    It's WAY TOO EASY to copy what youtube is doing.

    The competitors are already taking their share.
    • by badasscat (563442) <basscadet75NO@SPAMyahoo.com> on Thursday August 24, 2006 @11:05PM (#15975379)
      It's WAY TOO EASY to copy what youtube is doing.

      People said the same thing about Ebay.

      The thing is, while it may be easy to copy the site, what's not so easy is getting people to care. The reason why sites like Ebay and YouTube stay popular over the long-term (and that is my prediction about YouTube - it's only going to get bigger) is that it is a self-sustaining marketplace. In Ebay's case, sellers go where the buyers are, and buyers go where the sellers are. In YouTube's case, same thing - video posters go where the viewers are, and the viewers go where those posting the most video are.

      People spend hours just surfing around video there, searching for various things. You can find *anything* on YouTube - it's not just about home movies. I just found David Lynch's short-lived comedy series "On the Air" there a day ago, for example - this is a show I *never* thought I'd see again. I see stuff like this all the time there, and I rarely see similar things elsewhere. It's gotten to the point where if you want to find some piece of video, no matter how obscure, you just immediately go to YouTube because you know it's there. Why even bother with anywhere else?

      Of course, YouTube has some potential pitfalls, but then so does all of its competitors. Most of what's on the site is infringing copyright. They have ridiculous bandwidth costs. And the quality is not very good. So it is possible they could fall, but if they do, it won't be because some competitor copied their site and did X thing a little bit better. They're going to have to implode of their own accord or through some legal matter in order to turn over the reigns.
      • So all you have to do is build a search engine that will search YouTube, Google Video, Vobbo, Xflks, Uapoql, and all the other video search engines.

        eBay succeeded once they built up a centralized community: people could build up a good rep, something useful when you actually intend to pay a total stranger. Sharing video clips is something that has no "stickiness" by comparison. I liken it to search engines: there's nothing stopping you from moving from Yahoo! to Google, or from Google to Qauzmn, or from Q
        • So all you have to do is build a search engine that will search YouTube, Google Video, Vobbo, Xflks, Uapoql, and all the other video search engines.

          Yeah. That's how Dogpile unseated Google as King Of Search Engines, after all.
    • by n8k99 (888757)
      there are already ad companies putting ads on youtube with the intention of going viral. wifey works in advertising and showed me some stuff that the industry has been looking at and believe you me, that they are going to go crazy soon.
      • there are already ad companies putting ads on youtube with the intention of going viral.

        Currently, those ad companies are able to put their viral video ads up on YouTube for free.

        What motivation do they have to pay money to YouTube for the same privilege? And if YouTube starts charging to let users put videos up, how do they distinguish between ad and non-ad content?
  • by postbigbang (761081) on Thursday August 24, 2006 @10:28PM (#15975245)
    And the first one in a particular market segment that does it right gets a heavy share. Look at the iPlod.... My(gonad)Space... and many other interesting ideas.

    The problem: no revenue model for it yet. The great thing: easily understood and manipulated. Now there are many knock-offs, including PornoTube, and so on.

    What's it worth? With little intellectual property, not much except in future revenue potential. Some aging media king, like Sony, ought to buy them and lose lots of money on them, like TW did with AOL.

    Seriously folks, until a revenue model appears, it's just cool, not worth much
    • by ImaLamer (260199)
      Some aging media king, like Sony, ought to buy them and lose lots of money on them, like TW did with AOL.

      Usually though the opposite happens. Companies don't lose money on these deal, they usually gain a lot. A company comes around and buys up ****.com, and as they run it into the ground they make a fortune. They don't usually spend millions (or as estimated with YouTube, billions) of dollars to lose it in a gamble. The first thing a buyer, like Sony, would do is use their existing might to trick out their
  • The cost for users to stop using youtube and use a different service is very low. If the switching cost is low, they will switch. There is nothing intrinsically special about YouTube. Remember the old names of search market? Lycos, Web Crawler, HotBot? Blown away because of better technology.

    However if the youtube and its imitators replacing the Akimbo service and the other video delivery services they might be in the money. But video content producers are so vary of delivering it via the internet, I won

  • If there are 800M broadband users, and I am one, and I haven't watched any ads from youtube, then the value is worth less than they think by 1/800,000,000th.

    Probably more, because I actually have money, pay for my own ISP connection, own a house, etc. On the other hand, I am not TOO young, so maybe I am not the "money" demographic. Heh, The way things are going in the US, the "money" demographic aren't going to have any -- it is all going to be sucked into retirement benefits for "us", soon (whether we ne

  • by syousef (465911) on Thursday August 24, 2006 @11:32PM (#15975522) Journal
    "...because like, you know, like well, it's hard to explain but like it's really good, y'know."

    Yes that's enough from some silly teen bimbo shaking her backside on YouTube and thinking she's made a revolutionary discovery.

    What's it worth? Very little. Probably a little for the interface, a little for the interface, and a little for the brand name recognition. What will greedy morons pay? Who knows! Stopped trying to predict that during the .com boom. It seems
  • by WoTG (610710) on Friday August 25, 2006 @12:38AM (#15975841) Homepage Journal
    Really, what made YouTube a success?

    IMHO, it's soooo easy to watch the videos and share the videos. It used to be a royal pain to put video on your small or personal website. Real Audio? Windows Media? Quicktime? They were all problem prone. The odds of having those work for more than... oh, 70% of your viewers was slim at best. OS support, plugins working, and having the server side software -- it was all a mess. Never mind the bandwidth requirements. YouTube made it easy. Since more than 90% of people have Flash installed, and Flash video seems idiot proof (to watch), the whole video thing is now practical. Plus YouTube provides the bandwidth, and cut-and-paste HTML for sharing.

    In hindsight, it's a simple concept, executed well, and with good timing. That said, I wouldn't spend a billion for it. I don't think people care where they host their videos as long as it's free, quick, and easy. I doubt that many people actually browse YouTube, so switching costs for video sharers and viewers is pretty much zero.
  • by Agrippa (111029) on Friday August 25, 2006 @02:11AM (#15976137)
    No one will buy YouTube because the company that buys them will be the instant winner of hundreds or possibly thousands of copyright lawsuits. Right now there is basically no incentive to sue YouTube because you can't extract much cash from them. But what if Google/Ebay/Yahoo owned YouTube? Well, now you have a nearly bottomless well of cash to go after, and since the offenses would be so trivial to prove, its free money.

    Any company with the cash to buy YouTube is going to decide in the long run it isn't worth it.
    • "Any company with the cash to buy YouTube is going to decide in the long run it isn't worth it."

      Er... Rupert Murdoch? Any large media organisation who's business it is to buy and sell rights.

      • by elrous0 (869638) *
        Not to mention a HUGE bandwidth bill and piss-poor advertising model that has them HEMORRHAGING cash.

        Popular != Profitable

        -Eric

    • Re: (Score:3, Insightful)

      by poot_rootbeer (188613)
      since the offenses would be so trivial to prove, its free money.

      It's trivial to prove the existence of copyrighted content on YouTube.

      It is not as trivial to prove that YouTube was aware that sharing a particular piece of content was a violation of copyright, or even if it was that YouTube is liable for damages.
  • I Haven't Seen This Few Posts Since Winston Churchill Advocated Spam!
  • you tube should go for a billion atleast ... it popularity is on increasing side ... if facebook can collect a billion then youtube deserves it ...
  • ok. what's a potato worth? It depends who's doing the buying. To me, I'd take a look at their debt, their revenue, the wholesale copyright infringement and say not a whole lot.

     

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