> They bought youtube and to the best of my knowledge it does not make them any money.
Believe it or not, Google/Youtube DOES have a long-term business plan. See, the biggest problem small/independent producers have is getting copyright clearance for things like music and existing footage. The problem is that the individual transaction costs are astronomical compared to the value of the context where it's proposed for use. The legal costs eat the prospective licensee alive... assuming they're even big enough for the content owner (like MTV, or Viacom, or whomever) to bother taking their call in the first place.
Youtube's value equation is that they're big enough to directly secure bulk licenses to the entire media portfolio of companies like the above, or at least do it in a way that reduces the per-use transaction cost to the value of the license itself. In the future, when you go to watch Youtube videos, you'll have to occasionally watch commercials... or pay Youtube a monthly fee to remove them.
Right now, it's all free... but eventually, Youtube has plans to offer a smorgasbord of video hosting options (all of which include bulk recursive licensing from content owners who'd otherwise have to be negotiated with individually), ranging from "host your video for free and get nothing" (like now) all the way up to "host your video, and collect your own share of the commercial/subscription revenue.
Once again, Youtube's specific value proposition isn't just the video hosting... it's the bulk copyright clearance, which for many smaller producers can be an insurmountable hurdle to cross.
Also, don't underestimate the value to video producers, even though they themselves might not get direct revenue from people watching their videos on Youtube. Internet bandwidth is kind of like water... in the quantities most people use it in, it might as well be free... but when you need to fill a 30,000 gallon swimming pool... well... let's just say you'll definitely notice it when the bill comes. Lots of hosting and colo companies claim to have "unlimited" bandwidth... but if you actually come anywhere close to consistently using more than a few dozen (maybe hundred) gigabytes per month, they'll unceremoniously dump you as a customer. Getting that kind of REAL bandwidth when you have to buy it is expensive. For an idea, check out the rates charged by companies that will host porn sites. There's a reason why they're so much more expensive, and it has nothing to do with morality or law -- porn sites use UNBELIEVABLE amounts of bandwidth, and generate the most incredible server loads you've ever seen in your life. Hosting videos on your own server might not carry the CPU load coming from millions of hits per minute, but it most certainly WILL use comparable bandwidth. Google, however, doesn't pay nearly as much for ITS bandwidth, because it's big enough to be a Tier 2 ISP in its own right, and peer DIRECTLY with Tier 1 ISPs around the country.
That said, I don't think Google's likely to drop below $100, but it wouldn't surprise me if it dips as low as $140 or 180 by February. Actually, I kind of hope it does, so I can buy a few more shares of it. However, I can guarantee that Google's board won't allow its stock price to fall low enough to make the company a takeover target for cash reserves alone. If push comes to shove, it'll either start buying back its stock, or start handing out dividends to drive the price back up again. To tell the truth, if Google announced tomorrow that they were planning to buy Sun in a stock swap deal (say, 64 shares of Sun = 1 share of Google, with fractional shares either bought out or paid up for $4/ea), it wouldn't shock me in the least. Google's owners view Java as being VERY important in the grand scheme of things, and they're probably the only company (with the possible exception of IBM) who could afford to buy it and wouldn't completely destroy Sun in the process.
Believe it or not, Google/Youtube DOES have a long-term business plan. See, the biggest problem small/independent producers have is getting copyright clearance for things like music and existing footage. The problem is that the individual transaction costs are astronomical compared to the value of the context where it's proposed for use. The legal costs eat the prospective licensee alive... assuming they're even big enough for the content owner (like MTV, or Viacom, or whomever) to bother taking their call in the first place.
Youtube's value equation is that they're big enough to directly secure bulk licenses to the entire media portfolio of companies like the above, or at least do it in a way that reduces the per-use transaction cost to the value of the license itself. In the future, when you go to watch Youtube videos, you'll have to occasionally watch commercials... or pay Youtube a monthly fee to remove them.
Right now, it's all free... but eventually, Youtube has plans to offer a smorgasbord of video hosting options (all of which include bulk recursive licensing from content owners who'd otherwise have to be negotiated with individually), ranging from "host your video for free and get nothing" (like now) all the way up to "host your video, and collect your own share of the commercial/subscription revenue.
Once again, Youtube's specific value proposition isn't just the video hosting... it's the bulk copyright clearance, which for many smaller producers can be an insurmountable hurdle to cross.
Also, don't underestimate the value to video producers, even though they themselves might not get direct revenue from people watching their videos on Youtube. Internet bandwidth is kind of like water... in the quantities most people use it in, it might as well be free... but when you need to fill a 30,000 gallon swimming pool... well... let's just say you'll definitely notice it when the bill comes. Lots of hosting and colo companies claim to have "unlimited" bandwidth... but if you actually come anywhere close to consistently using more than a few dozen (maybe hundred) gigabytes per month, they'll unceremoniously dump you as a customer. Getting that kind of REAL bandwidth when you have to buy it is expensive. For an idea, check out the rates charged by companies that will host porn sites. There's a reason why they're so much more expensive, and it has nothing to do with morality or law -- porn sites use UNBELIEVABLE amounts of bandwidth, and generate the most incredible server loads you've ever seen in your life. Hosting videos on your own server might not carry the CPU load coming from millions of hits per minute, but it most certainly WILL use comparable bandwidth. Google, however, doesn't pay nearly as much for ITS bandwidth, because it's big enough to be a Tier 2 ISP in its own right, and peer DIRECTLY with Tier 1 ISPs around the country.
That said, I don't think Google's likely to drop below $100, but it wouldn't surprise me if it dips as low as $140 or 180 by February. Actually, I kind of hope it does, so I can buy a few more shares of it. However, I can guarantee that Google's board won't allow its stock price to fall low enough to make the company a takeover target for cash reserves alone. If push comes to shove, it'll either start buying back its stock, or start handing out dividends to drive the price back up again. To tell the truth, if Google announced tomorrow that they were planning to buy Sun in a stock swap deal (say, 64 shares of Sun = 1 share of Google, with fractional shares either bought out or paid up for $4/ea), it wouldn't shock me in the least. Google's owners view Java as being VERY important in the grand scheme of things, and they're probably the only company (with the possible exception of IBM) who could afford to buy it and wouldn't completely destroy Sun in the process.
