With the YouTube acquisition, Google gets the video site's user community and more data.
Gotta hand it to founders Chad Hurley and Steve Chen
Photo illustration by Tony Avelar/AP
With its $1.65 billion purchase of YouTube, not only has Google cemented its position as the leading supplier of cat-juggling videos, it has taken ownership of the sort of massive online community it previously had to rent through its deals with AOL and MySpace. This buys not only lots of user information, something near and dear to the hearts of marketers, but also lots of user labor--YouTubers generate significant amounts of content as they submit and comment on videos. That's data Google can use to improve the relevance of searches and the targeting of its ads.
YouTube, meanwhile, gets the benefit of Google's data center infrastructure, as well as protection from copyright lawsuits, thanks to Google's deep pockets, legal team, and relationships with large media companies.
Roughly two-thirds of U.S. online video visits go to YouTube or Google Video. So Yahoo and Microsoft will have to do something drastic to match the breadth of Google's search advertising reach, and it's going to cost them--Yahoo's offer of about $1 billion for Facebook reportedly isn't enough to pique the interest of the social networking site's management. Owners of profitless sites take heart: Sell before the bubble bursts and you might be the next Mark Cuban.
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