Was YouTube Worth It?

NYTimes DealBook has an interesting feature on the merits of the $1.6Bn YouTube deal Google made: Was YouTube Worth It?. Eric Schmidt, Google's CEO, recently said about the deal:“If you can build a sustainable eyeball business, you can always find clever ways to monetize it." Make sure to follow the previous link for some very insightful comments from the NYTimes readers.

Here's my answer:

By paying that much, with its own highly priced stock, for YouTube, Google also made sure neither Yahoo nor MicroSoft would get it.

The challenge is still with Google, and those folks who kept buying GOOG above $450 a share, to turn YouTube into a money making machine.

I tend to agree with Eric Schmidt on this one, it's more important to have the traffic and then you can monetize on it. Among the challenges one can think about the copyright issues (in case they keep coming up the whole YouTube model has to change), and the many alternative sites.

At the end of the day, the winner will be the company(/ies) that can assemble the best video-infrastructure (storage, access, publication, scalability, reliability, etc.) the fastest. The current limits will also have to be relaxed--i.e. size of the video-clip and so on. Then, attach a community, like Flickr and Amazon, and you have a money machine.

For some earlier thoughts on this, check this up: Long Tale