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YouTube Won't Sell For Less Than $1.5 Billion 178

Posted by Zonk
from the quite-a-few-flash-ads dept.
Joel from Sydney writes "According to a report in the New York Post, YouTube has informed potential buyers it won't be sold for anything less than $1.5 billion. The report lists Viacom, Disney, AOL, eBay and News Corp as potential buyers. Given that News Corp purchased MySpace last year for $580 million, is this a realistic figure?" From the article: "YouTube's stated business model is to 'pursue advertising,' but potential advertisers might be skittish considering industry estimates that roughly 90 percent of the content viewed on its site violates copyright laws. And at least one giant, Universal Music, is threatening to sue the company if its artists' songs keep appearing there. As it tries to focus on videos that don't use content owned by media companies, it yesterday launched the YouTube Underground, a contest to 'discover the most talented unsigned bands and musicians on YouTube,' backed by Cingular Wireless, Gibson Guitar and ABC's 'Good Morning America.'"
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YouTube Won't Sell For Less Than $1.5 Billion

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  • They are right. (Score:3, Insightful)

    by oyenstikker (536040) <slashdot @ s b yrne.org> on Friday September 22, 2006 @08:49AM (#16160074) Homepage Journal
    It won't sell for under 1.5b. It won't sell at all. Welcome dot-com bust 2 point oh.
    • Re:They are right. (Score:5, Insightful)

      by AutopsyReport (856852) on Friday September 22, 2006 @09:00AM (#16160117)
      I'd love to believe that. But given the fact that Yahoo just tendered $900 million for Facebook [com.com] while leaving much of the company's structure unruffled, one billion or more isn't out of the question for a notorious web service. At least it's getting closer to the $2 billion [slashdot.org] they really desire.
    • Re: (Score:3, Funny)

      by russ1337 (938915)
      Now the major media companies & RIAA have a figure to put on their lawsuits when suing for copyright infringement from kids lipsinking to Brittany. They'll want Youtube to just come out with their hands up and call it quits.
    • With all the copyrighted material on YouTune, all you need is a few well calculated lawsuits.

      I can see YouTube making a nice chunk of money, but 1.5 billion for a service that could easily be replicated doesn't seem realistic.
      • Re: (Score:3, Insightful)

        by jrockway (229604) *
        The DMCA Safe Harbor clause will allow them to escape litigation as long as they remove the video as soon as they receive a takedown notice. Which they've been doing. To be honest, litigation isn't YouTube's problem. The poor video quality and the lack of people willing to pay for it is what's going to do them in.
        • by cptgrudge (177113)

          Plus, they are really selective in enforcing copyright. Which is fine. It's their copyright. There's a video (among others) on YouTube that is a clip of the new Studio 60 show. Judd Hirsch's "rant" that he has on live TV. It's not put up by NBC, but I'm sure they could care less right now. All it does is build buzz for the show.

          I agree in that I don't think YouTube can possibly make their money back on ad revenue alone. I mean, they serve up, what, 100 million videos a day now? I think I saw that

        • by ncc74656 (45571) *
          To be honest, litigation isn't YouTube's problem. The poor video quality and the lack of people willing to pay for it is what's going to do them in.

          Poor A/V sync has been a bugaboo of theirs as well. There's nothing like clicking on a video, starting to watch it, and then noticing a couple or three minutes in that the audio and video have drifted so far apart that whatever you're watching looks like a badly-dubbed kung fu movie.

    • You're busting my balls here - $1,475,000,000 on my Discover card and that is my final offer.
    • by tobiasly (524456)
      $1.5 billion does seem a bit high. If I were the CEO of NewsCorp, I'd make YouTube a counteroffer: $1 billion, plus a tank full of sharks with laser beams.
  • Free Speech (Score:4, Insightful)

    by eldavojohn (898314) * <eldavojohnNO@SPAMgmail.com> on Friday September 22, 2006 @08:50AM (#16160080) Journal
    When you've gotten so big [wikipedia.org] that people are afraid you're controlling free speech and the press, then I don't think $1.5 billion is too much to ask.

    Remember, the CEO of News Corp is Rupert Murdoch. Everything you see with the Fox logo is his. Its yearly revenue is around $24 billion. "News Corp" is a nice generic name that no one remembers while it's holdings grow out of control. Whenever you see Fox or Myspace or anything listed in the link above, you should be thinking one thing: "It's all News Corp under the direction of one man."

    Pretty scary when you think about it.
    • by Himring (646324)
      Badnewhughes recent youtube contribution is worth every bit of 1.5 bill....

      badnewshughes [blogspot.com]

    • by Anonymous Coward

      Roger Taylor (The drummer from Queen) wrote an excellent song about Rupert Murdoch, to be found on his 'Happiness' album.
      Check out the Lyrics :-) [google.co.uk]
    • Re: (Score:3, Insightful)

      by khallow (566160)
      No. I don't find it scary. There is after all, a lot of independent news sources in the world that aren't being run by "one man". $24 billion isn't that large compared to Time Warner or Disney, and it's comparable to CBS. My take is that people are "concerned" because of Fox News's US Republican party bias not because it is so large.
    • by grumpyman (849537)
      I totally agree - YouTube may be depending on a advertisement route right now, however, its platform is poise to revolutionize video content distribution AND the source - I'd dare to say the big support that YouTube get is not because of pirate materials but user generated content. Honestly how it translate to $$$ is another issue. Think of it as people watch 'tv program' on youtube and it generates youtube-ad like tv-ad every so often; then youtube revenue ~= tv-ad revenue. Wow... that's scary. OTOH, I
  • by Billosaur (927319) * <wgrother@NOsPAm.optonline.net> on Friday September 22, 2006 @08:53AM (#16160090) Journal
    INTERNET upstart YouTube, the bane-du-jour of copyright holders everywhere, won't sell itself for anything less than $1.5 billion, The Post has learned.

    But that number far exceeds the price top media execs appear willing to pay for a company many believe lacks a sustainable business model.

    Let's see... Internet company... flaky business model... outrageous amounts of money... well, my time machine works -- I must be back in 1998!

  • Web 2.0 ... (Score:2, Interesting)

    by DreddUK (255582)
    ... so now we've got

    1. Create service
    2. Get other people to violate copyright with your service
    3. Avoid Lawsuits
    4. ???
    5. Profit (or at least $1.5B)

    I'd really love to have seen their pitch to any VC firms ;)
    • Re:Web 2.0 ... (Score:5, Insightful)

      by Rob T Firefly (844560) on Friday September 22, 2006 @09:08AM (#16160152) Homepage Journal
      I'd really love to have seen their pitch to any VC firms
      Heh, it seems to me that's the opposite of what they're trying to do. I'd guess they don't want to sell at all, they're willing to stick to their own guns and find a way to make it work. The sponsored contests and recent deal with Warner are steps in that right direction. This whole $1.5B thing seems to be just a way to shut up all the megacorps who have doubtless been peppering them with offers like the rest of us get junk mail.

      If someone is insane enough to offer that much, well hot damn! Take the cash and run! Otherwise, they get to go about their business, with a bit more buzz-implied value than before.
      • Re: (Score:2, Interesting)

        by DreddUK (255582)
        So it turns in the insurance business equivalent of:

        Broker: Sure we'll insure your car.
        Client: Great, how much?
        Broker: $100,000 for this year.

        In other words, we don't want your business, but we don't want to tell you to your face. We'll just make our offer so astronomically high, you'll go quietly away.

        Saying that, shouldn't they have made their figure $3 billion or something. £1.5B seems like they might get a bite.
        • Which can be really dangerous. It might just backfire.
          I had that experience myself, asking once for about 5 times the regular price on a service I really didn't want to execute. Guess what ? They said yes.

          Moral of the history: if you are going to overprice so you get a "no", make sure your price is so high there is absolutely no chance they will say yes.

          I should have asked 20x, not 5x. YouTube should be asking for $100bi is that is what they want (not to sell).
          • It only backfired because you didn't give them your true price, which obviously was much higher. If you'd taken the time to consider what it was actually worth to you, and they still said yes, you would have gladly accepted. If you actually did not want to perform the service no matter the price, you should've either told them that or priced it so high that it would be impossible for them to pay. For example, charge them a trip to the moon once a year. "Oh, you can't send me to the moon every year for the r
    • Re:Web 2.0 ... (Score:5, Interesting)

      by hackstraw (262471) * on Friday September 22, 2006 @09:10AM (#16160163)

      Wow, now its a 5 step plan, pretty soon 12 :)

      Yeah, we all laughed at the sock puppet and the Superbowl ads, but there is still mega-profit in the .com world.

      The coolest thing is that I heard on the news the other day where people at the other megacorps are realizing that there is profit in copyright infringement. Madonna's people are OK for uploaded stuff on youtube because they realize its free advertising. Much like the bands that allow taping of their concerts (we are looking at you Bob Weir). Who knows, maybe we can soon buy music in unencumbered digital formats at real market value. Maybe.

  • by postbigbang (761081) on Friday September 22, 2006 @08:55AM (#16160100)
    for about $2B, then it's not so much. And Broadcast.com (Mark Cuban's "invention") didn't really work yet. And I'll bet he's grousing that his current HD venture can't get that figure because it's not as evolved, and certainly not as popular as YouTube.

    The price is huge, but it's not out of line with web-based social properties. Not that it's fair.... but the future revenues if it's managed well could be very big.
    • by cowscows (103644) on Friday September 22, 2006 @09:33AM (#16160279) Journal
      The thing is, the only thing that YouTube has that really isn't trivial to duplicate is mindshare. There's no incredible technology there. It's a decent service, and takes advantage of increases in bandwidth and the amount of digitized content out there, but the only thing that makes it significantly different from any potential competitors is the number of people who've heard of it.

      Now, having that mindshare and brand recognition is certainly worth something, but YouTube itself is a prime example of why that's not as important as they think it is. YouTube grew out of nothing so incredibly fast, as have many other big websites, and there's no guarantee that its marketshare will last. If something better comes along, it will be trivial for the populace to move on to that and all but forget about YouTube.

      When/if that happens, what is the owner of YouTube left with? A pile of servers full of a bunch of inactive accounts and a crapload of content that they don't actually own. It seems pretty damn risky to spend 1.5 billion dollars on. With that kind of money and a little determination, I'd imagine you could create quite a few impressive YouTube competitors, and maybe come up with something better.
      • by postbigbang (761081) on Friday September 22, 2006 @09:41AM (#16160328)
        Anyone can lose groundswell. MySpace and others were the first in their 'space' and therefore are much tougher to unseat unless they don't sway with the times. And this very site is subject to the same public whimsy. The public is fickle. Unless your value is easily demonstrable, you can be flickred off easily.

        And look at Ford, look at Sony, look at a lot of other 'solid' brands that could seemingly do no wrong.... now battling survival.

        It's a dream for many to create a market and dominate it. For now, YouTube has it. Others have tried (Veoh as an example) and failed. The formula isn't quite perfect, but with a little bit of tooling, YT could make a ton of entertainment revenue, as well as dominating perceived VoD. Already Warner has done a deal to legitimatize their videos on YT, and others will follow. It's an enviable position to be in.
        • And look at Ford, look at Sony, look at a lot of other 'solid' brands that could seemingly do no wrong.... now battling survival.

          I think you meant "battling for survival," but I like the way you put it. Especially in the case of Ford, it sometimes does seem like they're battling survival itself, and determined to overcome it at all costs.

        • by LazyBoy (128384)
          MySpace and others were the first in their 'space' and therefore are much tougher to unseat unless they don't sway with the times.
          Actually, I think Friendster was there first and they are rumored to have turned down a $750M offer. They may wish they hadn't...
      • by nEoN nOoDlE (27594) on Friday September 22, 2006 @10:51AM (#16160683) Homepage
        You're missing another factor - content. Sure, YouTube grew so fast out of nothing but it was a pioneer in that field, so there weren't many other places to upload and share your videos. But, as it started growing with more videos, more people came, and the more people that came, the more videos were uploaded by them. People don't go there because it's just the name. People go there because there are millions of videos on there that they can send their friends. Sure, the technology is easy to duplicate, but it would be a Herculean task to copy all of the videos that make it popular. The barrier to entry into the online video sharing market is huge now because YouTube has the content, and people don't want to jump from site to site saying "Hmm, what site has that new U2 video?"
        • Re: (Score:3, Insightful)

          by cowscows (103644)
          True, but the strange thing about YouTube is that they don't own the majority of the content. Regular people upload stuff for whatever reasons they have, and much of what we've seen in the past with all the P2P networks and such leads me to believe that those same reasons will motivate people to upload again if another site offers a better experience.

          YouTube has the content, but it's not exclusive content. They've certainly got a leg up on the competition, but they don't have any sort of lock-in.

          I'm not rea
          • by aaarrrgggh (9205)
            ...and most importantly, for $1.5B, you could get a hell of a lot more starting from the ground up. Realistically, you could spend on the order of $500M and compete head-to-head. All YouTube is really worth is the equipment, time, and the marketing effort required to supplant their position. It's hard to imagine this having a value of more than $600M.

            But, there's a sucker born every minute...
      • Re: (Score:3, Insightful)

        by SnapShot (171582)
        Are there any popular (and valuable) web sites out there that aren't "trivial to duplicate"? It's not like you need an advanced degree in particle physics to make an online auction site, or a search engine, or an online bookstore, or a collection of vanity web pages. It's all about the mindshare.
        • by cowscows (103644) on Friday September 22, 2006 @02:50PM (#16162502) Journal
          Well, yeah, there are some. You might be able to write a database and a front end to sell a million different items like Amazon.com does, but can you buy the warehouses to store all those goods, negotiate with all those manufacturers, and hire and organize all the people to stuff that stuff into boxes and send it off?

          You can probably write a backend to organize and display breaking news stories, but can you organize, motivate, and edit for a large group of journalists out trying to discover new information?

          It's less about what a website's servers do when you request a page, and more about the information/content/resources that those servers are drawing from. My point about YouTube is that there's nothing special about their content, it's not exclusive, they don't own it, and they're entirely reliant on their customers for it. It's a nice business model when you can get your customers to do most of your work for you, but you have to keep in mind that people are generally fickle.
      • Even if YouTube lost a bunch of popularity, it would theoretically be left with at least *some* content it owned rights to. I thought part of their terms of service included the fact that they reserve the rights to whatever content you upload to them? Obviously, uploads of previously copyrighted works don't apply -- but there are probably loads of humorous "reality TV-esque" clips made by college students and the like that YouTube could sort though, package up, and resell.

        Would that make them worth 1.5 bi
        • by cowscows (103644)
          Oh, it's certainly not worthless. It might even be worth hundreds of millions of dollars. It just seems to me like whoever's calling the shots over there at YouTube appears to be blinded by greed, and should realize how quickly they could lose a whole lot of their value.

          The bulk of YouTube's value is based on content that they did not create, nor do they have any claim to. The bulk of their value was built by their customers. Yet they could sell all of that for a huge chunk of money, and not have to share i
  • by zymurgy_cat (627260) on Friday September 22, 2006 @08:56AM (#16160104) Homepage
    They want their business model back.
  • by SanderDJ (1004445) on Friday September 22, 2006 @08:57AM (#16160107)
    The first time I looked at YouTube was not so long ago. I was shocked to see how easy it was to find complete video clips, including the copyright notice at the end.

    Really, enjoy it while you can, because the record companies will sue YouTube into the ground. Soon.

    So this company will not be worth anything in a year.

    • by eldavojohn (898314) * <eldavojohnNO@SPAMgmail.com> on Friday September 22, 2006 @09:07AM (#16160147) Journal
      Really, enjoy it while you can, because the record companies will sue YouTube into the ground. Soon.
      That's not entirely true.

      Or, to put it another way, I think there are better alternatives to suing and the record companies have figured this out. When they sued Napster, Kazaa & eDonkey and then started suing users, I don't think their profits went up. I mean, they might have gotten a few million from the companies and a few thousand from the users that year. But they destroyed something that they could have taken advantage of. Most industries would kill for an infrastructure of people acting as their own marketing tools spreading their product around. Now, it was illegal because the product was being copied illegally. But if the record companies could have taken a look at the business model and adapted it to suit their needs and sued for the ability to call the shots instead of just pure cash, I think they would have come out further ahead in the long run.

      You see, if the record companies looked at YouTube and tried to drive them in the ground, they'd only be trying to suppress something that has come about naturally. Why don't they just claim what is theirs and demand all the copyrighted material ad revenue goes straight to them? Why don't they try to work something out with YouTube in an attempt to generate a recurring income? I mean, surely YouTube can keep the quality down on the work or restrict it to certain songs so that people will feel compelled to purchase CDs/DVDs, can't they?

      I think YouTube is like a wild stallion and the record industry is afraid of it. They can either shoot it dead (but that will just spawn more) or tame it and generate a steady income from it.
    • Depends a lot on video clips of what. First up ignoring the fact they are low quality. A lot of the stuff I have watched which are TV programs which basically replaces what I would be watching on TV now and also is generally something that has already aired.

      Lets not quibble, if you really wanted DVD quality TV rips you could bittorrent them.

      Youtube basically replaces TV (for me at least), and in some cases I have actually bought stuff based off of what I have watched on youtube as its been intresting but an
    • by 4D6963 (933028)

      So this company will not be worth anything in a year.

      This comment sounds like these false predictions from the past that you read and laugh at for how far from the truth they were. YouTube is about as likely to die as Apple.

      My two cents : record companies will rather partner with YouTube to make money out of it than sue it (isn't it what Warner Music has been doing already?). Why kill the golden egg hen?

  • by HighOrbit (631451) * on Friday September 22, 2006 @08:58AM (#16160112)
    ....pay for the bandwidth. How do they manage to pay for it now? I'd love to see some figures on their revenue vs costs.
    • Re: (Score:3, Informative)

      by 91degrees (207121)
      Estimates for the bandwidth bill are about $1 million per month. They pay for it using loans and venture capital. At the moment, it's a black hole for cash, but that's not neccesarily a problem.

      Cost of bandwidth will go down. They may become successful enough that they can start advertising or charging a subscription or something.
      • Re: (Score:3, Informative)

        by gEvil (beta) (945888)
        I wouldn't be surprised if the bandwidth bill was considerably higher than $1M a month. That was the figure I heard being tossed around about 4 or 5 months ago. YouTube's been continuing to grow at a steady rate all year, so it's probably approaching $1.5M/month.
        • Re: (Score:2, Insightful)

          YouTube's been continuing to grow at a steady rate all year, so it's probably approaching $1.5M/month.

          Then factor in the technical staff, storage costs, hardware, servers, etc., and Youtube could easily be burning through $5 million cash per month. Factor in possible litigation for copyright violations and the number skyrockets. Yahoo, Google and (just a few days ago) Microsoft have their own variations on the video sharing service. I wouldn't be surprised if Flickr and Webshots are not working on a simi
      • by athmanb (100367)
        But then there's still the question, why would you pay 1.5 billion for a site that loses a few millions a month.
        You could instead just wait until Youtube implements annoying ads, then create another video sharing site with more bandwidth paid off for a full year, no ads and all give everybody that signs up a $100 gift certificate and it would still run you cheaper than buying Youtube.
    • pay for the bandwidth. How do they manage to pay for it now?

      It would make a great loss leader for a broader based business. Its also a good fit with the news corp policy of running tabloid newspapers.

    • by Duds (100634)
      They have no revenue.

      Work it out from there.
  • 1.5 huh (Score:2, Insightful)

    by dean.collins (862044)
    give me some of what they are smoking, zero revenues, zero profitability, zero commercial trade secrets/competitive edge.

    for $500m I could replicate You Tube in 3 months.

    dotbomb 2.0 - how short are peoples memories?

    Dean Collins
    www.Cognation.net
    • Re: (Score:3, Interesting)

      by protohiro1 (590732)
      No kidding. What, exactly, does youtube have that can't be easily copied? The real winner in this online video thing is adobe and FLV.
    • for $500m I could replicate You Tube in 3 months.

      You could create a site with all the same functionality as YouTube, and just as much available bandwidth, but where would you get content? How would you persuade all the people posting videos to YouTube to switch to your MeeToobe site?
  • While I understand that the price is set by the ability and willingness to buy on one and the willingness to sell on the other side, I just honestly ask where youtube's value is? What about it is "worth" 1.5b? Content? Hardly. Most of it is "rubbish". Rubbish that people watch, granted, but still mainly rubbish. Nothing you could syndicate, if only for copyright issues. Its userbase? How? They don't buy anything, they don't sell anything, they just hog the limelight in an attempt to gain 15 minutes of fame.
    • You're right, of course.
      On a related note, I still haven't understood why eBay paid 4Bn for a glorified Teamspeak.
  • I'd take any offer over $50m. Youtube is Napster's legal problems with far less ground to stand on since they host the videos on their servers.
  • There are a lot of eyes looking at YouTube... supposedly 100 million videos watched a day. Even so I have my doubts as I feel the people that watch YouTube just want to watch videos and have no loyalty specific to YouTube. Admittedly they made web videos easy (no plug ins for QuickTime, Real, or MSN) and got people to embed videos on other sites. However I get the feeling that if YouTube craters due to copyright suits, or the company that buys them sticks ads all over everything, people will just start watc
  • Earlier this year a report about Google in the Economist claimed that some analysts felt that the high share price of Google was justified simply because they expected Google to end up with a minimum of 1% of the market for all internet distribution of video content. That was before YouTube caught on. Given that YouTube is now in a good position to grab onto a very large chunk of online video sales, and because many of YouTube's customers are young people who can easily be developed into a long-term loyal c
  • by melted (227442) on Friday September 22, 2006 @11:56AM (#16161198) Homepage
    It's about to go down in price. Google Video is about to release a new, less ugly version and then there's http://soapbox.msn.com/ [msn.com] and Live Video Search.
  • by Animats (122034) on Friday September 22, 2006 @12:30PM (#16161466) Homepage

    The Internet Archive [archive.org], which is a nonprofit, is also in the free video archiving business. Their main concern has been storage, of which they now have petabytes. Making the system friendly to the casual user has been a lower priority, and the Archive has a tiny staff. But you can get an Archive account and upload your video right now. If you have anything of historical significance, please do so.

    The Archive has had some problems with bandwidth, but they just moved to a new data center, and that's improving. Last year, they obtained an archive of Greatful Dead recordings, which can be played out as streaming audio. The Deadheads, with their short-term memory loss problems, would play the same stuff over and over again. This was sucking up most of the outgoing bandwidth and interfering with video playback.

    The Archive will probably be around long after YouTube is gone. Among other things, there's a duplicate of the Internet Archive in Egypt [bibalex.org].

  • I'm pretty sure in 5 years it will be known by most as "Whotube? oh yeah that..." Longetivity sure is short lived in our modern web 2.0-sphere.
  • Costs owed for excessive bandwidth = $400,000,000
    Current value of impending lawsuits =$900,000,000
    Payoffs to various politicians, judges and law enforcement = $150,000,000
    Net value = $50,000,000*

    * = value does not take into account private jets, ferarris, on-the-job chefs, Bawls dispensers or boardroom lapdances.
  • 1. It's a really, really shitty site populated mostly by teenage morons
    2. It's probably a liability because OMG STALKERS SOMEBODY THINK OF THE CHILDREN

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