Art Of Money

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Old news, I know…sorry but I’ve spent the last 3 days in bed fighting a cold and I wanted to toss my 2 cents worth out on this deal.

With its $1.65 billion purchase of YouTube.com, Google Inc. is buying a Web site made famous by quirky videos largely produced by amateurs.

Holey crap that’s a lot of money for a company that is far from profitable.

Mark [never short of an opinion or 3] Cuban thinks YouTube is vulnerable to lawsuits and that Google is crazy to have purchased them.
In this series of articles, a couple or which ran just before the purchase, he predicts that YouTube will likely be lawyered into bankruptcy with lawsuits over copyright infringement issues [a lot of the most popular videos on there are kids lip syncing over copyright protected popular music].

YouTube has drawn less flattering comparisons to the original Napster, the once-popular music sharing service that was buried in an avalanche of copyright infringement lawsuits filed by incensed music companies and artists.

While most videos posted on YouTube are homemade, the site also features volumes of copyrighted material — a problem that has caused some critics to predict the startup eventually would be sued into oblivion.

Source Boston.com.

So why did Google pony up $1.65 billion of its coveted stock for this company?

They’re buying a trend. Google has been trying to capture in a decent slice of the online video marketplace with their own service, but the purchase is an acknowledgment that they are just too far behind to make a serious dent in market share.

If you’re the kind of person that believes in investing in trends then Google has just given us all a pretty solid indication of the coming wave of video online and how profitable they believe it is going to be.

I can just see Google’s R & D department scurrying to contextual link ads that they can burry into videos.